Business Tax Briefs: Investors Eye ‘Up-C’ Partnership Structure (1)

Overseas investors may be seeking partnership structures where they hold interest indirectly through a corporation; and the Internal Revenue Service is working on guidance to address stock attribution rules that create controlled foreign corporations.

Indirectly Held Partnerships

Foreign investors may be attracted to the tax favorable “Up-C” partnership structure for reasons beyond it being more tax efficient, an IRS official said.

Businesses taxed as pass-throughs that are considering initial public offerings are increasingly considering Up-C structures, in which investors hold interest in a partnership indirectly through a corporation.

It’s an interesting trend that isn’t only driven by taxes, ...