IRS Finalizes Rules on Partnership Basis-Shifting Maneuver (2)

The IRS issued final regulations Friday to require reporting of certain partnership-related basis adjustment transactions, a move meant to prevent complex partnerships from bloating their tax deductions.

The final rules (TD 10028; RIN 1545-BR07) identify the basis-adjustment transactions as “transactions of interest,” which require material advisers and certain participants in the transactions to file disclosures with the IRS. The regulation comes as part of the Biden administration’s effort to push forward anti-abuse rules meant to fight complex partnerships using aggressive strategies to cut their tax liabilities. The rules make the advisers and participants subject to penalties for failure ...