The IRS properly disallowed $713 million of a $743 million deduction that a related-party partnership claimed for a basis adjustment because it lacks economic substance, the US Tax Court said Monday.
Judge Christian N. Weiler rejected the 2012 basis adjustment taken by Otay Project LP under IRC Section 743(b) following a technical termination, a stream of complex restructuring, and later liquidation of the partnership after a long-running dispute between brothers and real estate developers Albert and James Baldwin.
IRC Section 743(b) governs adjustments to the tax basis of partnership property when a partnership interest is sold, exchanged, or transferred upon ...
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