partnership Archives - TAX CONTROVERSY 360

IRS Roundup for November 25 – December 13, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for November 25, 2024 – December 13, 2024.

November 25, 2024: The IRS released Treasury Decision 10011, which modifies the regulations governing the sale of a taxpayer’s property that the IRS seizes by levy. The modified regulations allow the IRS to maximize sale proceeds for the benefit of the taxpayer and the public fisc. Effective November 5, 2024, these regulations affect all sales of property the IRS seizes by levy.

November 26, 2024: The IRS issued Notice 2024-85, announcing revisions to transition relief for third-party settlement organizations under Internal Revenue Code (Code) § 6050W, also known as “payment apps” and “online marketplaces.” Under this guidance, payors will be required to report transactions when the amount of total payments is more than $5,000 in 2024, more than $2,500 in 2025, and more than $600 in calendar year 2026 and after.

November 26, 2024: The IRS issued Announcement 2024-40 in which it confirmed that amounts paid or incurred by a taxpayer for the construction, expansion, or modernization of advanced manufacturing facilities pursuant to an agreement entered into with the US Department of Commerce under 15 U.S.C. § 4652(a)(6)(C) (the CHIPS Act of 2022) will not fail, solely by reason of such agreement, to constitute a “qualified investment” for purposes of determining the amount of any advanced manufacturing investment credit under Code § 48D.

December 2, 2024: The IRS released Internal Revenue Bulletin 2024-49, which includes the following:

Revenue Ruling 2024-25, which provides the interest rates for overpayments and underpayments of tax for the calendar quarter beginning January 1, 2025.
Revenue Ruling 2024-26, which provides the December 2024 applicable federal rates for purposes of Code § 1274(d) and relates to the determination of issue price in the case of certain instruments issued for property.
Notice 2024-81, which provides an update for weighted average interest rates, yield curves, and segment rates.
Notice 2024-83, which provides an update to the fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Trust Fund. This update is effective for plan years ending on or after October 1, 2024, and before October 1, 2025.

December 2, 2024: The IRS issued proposed regulations under Code § 959 regarding companies’ previously taxed earnings and profits (PTEP). These proposed regulations are the first in a series of guidance on PTEP rules. This first tranche of guidance includes a framework on which to build rules on mergers and acquisitions, along with provisions addressing basis adjustments under Code § 961 and foreign-currency gains and losses.

December 2, 2024: The IRS announced that December 2 marked the beginning of the 9th annual National Tax Security Awareness Week. The IRS warned of holiday scams and [...]

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Refined Coal Tax Credit Case Filed

On September 14, 2017, Cross Refined Coal LLC (Partnership) (and USA Refined Coal LLC as the Tax Matters Partner) filed a Petition in the US Tax Court seeking a redetermination of partnership adjustments determined by the Internal Revenue Service (IRS). According to the Petition, during audit of the 2011 and 2012 tax years, the IRS reduced the Partnership’s and certain partners’ Internal Revenue Code Section 45(e)(8) refined coal production tax credits by several million dollars and disallowed several million dollars more of claimed losses. The Notice of Deficiency, a copy of which is attached to the Petition, provides the following reasons for the adjustments:

Neither the Partnership nor the partners have established the existence of the partnership as a matter of fact;
The formation of the Partnership was not, in substance, a partnership for federal income tax purposes because it was not formed to carry on a business or for the sharing of profits and losses from the production or sale of refined coal by its purported members/partners, but rather was created to facilitate the prohibited transaction of monetizing refined coal tax credits;
The refined coal tax credits are disallowed because the transaction was entered into solely to purchase refined coal tax credits and other tax benefits; and
Ordinary losses were disallowed because it has not been established that they were ordinary and necessary or credible expenses in connection with a trade or business or other activity engaged in for profit.

As we have previously reported, the IRS has issued negative guidance concerning refined coal transactions and has denied the tax benefits associated with some of those transactions.

We will be watching this case closely and will report back on any developments.