IRS TO ADDRESS PTP TERMINATIONSWashington, D.C. - The Internal Revenue Service plans to issue guidance on technical terminations of a publicly traded partnership resulting in multiple short tax years within one calendar year.

Technical terminations of PTPs resulting in multiple short tax years within a calendar year can cause considerable problems for taxpayers. The IRS said that it is working on the issue through its Industry Issue Resolution Program, and that taxpayers who follow the resulting guidance can avoid time-consuming audits.

The issue that the IIR program is considering arises when more than 50 percent of a PTP's capital and profits interest are sold or exchanged within a 12-month period, thereby resulting in a technical termination of the partnership under Section 708(b) of the Tax Code. For the calendar year in which it occurs, a technical termination results in the PTP having two short tax years. Consequently, the PTP is required to file a Form 1065, "U.S. Partnership Return of Income," for each short tax year. This requirement can cause tax problems for the partnership.


Chicago - A majority of tax and financial executives favor the research and development tax credit simplification proposed by the Senate, according to a survey by Grant Thornton.

The survey found that at least 60 percent of the 314 CEOs, CFOs, comptrollers, tax executives and other tax staff polled by Grant Thornton would either use or consider using the alternative simplified method to claim their research credit if Congress enacts the legislation passed by the Senate on Sept. 23.

Bipartisan legislation now approved by the full Senate would raise the rate for the alternative simplified credit to 14 percent. The alternative simplified credit method currently allows taxpayers to forego the traditional research credit in favor of a simplified version equal to 12 percent of qualified research expenses exceeding half of their average qualified research expenses over the last 3 years.

If the legislation is enacted, 35 percent of respondents said that they would definitely switch to the simplified method. Only 17 percent would rule it out. If the simplified credit were raised to 16 percent, which was proposed in earlier bills, then over 46 percent of respondents would switch and less than 9 percent would rule it out.

Those surveyed indicated that they were most interested in the simplified version for its simplicity, rather than its potential for more tax savings or audit protection.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access