Caution for Partnerships Urged, Even With IRS Effort Pared Back

The Treasury Department and the IRS may be scaling back some of their tougher oversight of big partnerships, but that doesn’t mean the partnerships will have carte blanche.

Treasury and the IRS moved closer last week to scrapping requirements for partnerships to report potentially abusive “basis-shifting” transactions, which some have used to cut their tax bills. Nonetheless, a senior Treasury and IRS official said the agencies still plan to pursue such abuses, using guidance and a recent US Tax Court ruling that bless their use of the “economic substance doctrine” as a basis for cracking down on partnerships.

As a ...