Daily Tax Update - July 31, 2015: Final and Proposed Regulations Address Partner's Distributive Share

Final and Proposed Regulations Address Partner’s Distributive Share:  Treasury and IRS issued final regulations under section 706 regarding the determination of a partner’s distributive share of partnership items of income, gain, loss, deduction, and credit when a partner’s interest varies during a partnership taxable year.  The final regulations finalize the varying interest rules contained in 2009 proposed regulations, with changes to expand the safe harbor for certain service partnerships.  

Treasury and the IRS also issued proposed regulations today under section 706 on the determination of a partner’s distributive share of some allocable cash basis items and items attributable to an interest in a lower-tier partnership during a partnership tax year in which a partner’s interest changes.  

President Obama Signs Highway Trust Fund Bill With Tax Measures:  Today, President Obama signed into law H.R. 3236 to fund a three-month extension of the Highway Trust Fund.  The bill is funded in part by new tax compliance measures including new reporting rules for estate beneficiaries and new due dates for certain information returns for partnerships and corporations. 

Guidance Plan Includes Section 355 Transactions:  Treasury and the IRS released their 2015-2016 joint priority guidance plan.  The plan contains 277 projects, including a new guidance project relating to the requirements under section 355, specifically the active trade or business and business purpose requirements and the prohibition on device for the distribution of earnings and profits.  

Static Mortality Tables for Pension Plans Updated:  Notice 2015-53 provides updated static mortality tables to be used under section 430(h)(3)(A) for calculating a defined benefit pension plan’s funding target and other items for valuation dates occurring during calendar year 2016.