IRS Wants to Create Tests to Determine Partnership Liabilities

The IRS plans to create “mechanical tests” to help determine liabilities during the transfer of property to the partnership or partner, an official said Saturday in Dallas at a conference hosted by the American Bar Association’s Tax Section.

The agency withdrew temporary rules in 2019 under Section 752 that limited a partner’s ability to increase investments through debt, without causing a disguised sale. An official said in April the agency was putting the finishing touches on the final rule, but didn’t expect it to be controversial

• The temporary rules received pushback that regulations were “too many facts and circumstance,” ...