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Robert Kovacev Quoted on IRS's Focus to Close Asset Loophole in the Washington Post

"Closing the Asset Loophole Could Add Billions to Tax Collections, IRS Says"

Washington Post

Robert Kovacev commented on the Internal Revenue Service's (IRS) announcement of a new dedicated group in the Office of Chief Counsel specifically focused on developing guidance on partnerships, including closing loopholes. They announced several steps to address so-called "basis shifting" which involves adjusting the basis of property held by a partnership in certain circumstances. Even though the Internal Revenue Code explicitly authorizes this practice, the IRS argues some taxpayers use it improperly and has proposed regulations to restrict partners who are related parties from obtaining tax benefits from these transactions. Kovacev argued that businesses claiming those tax benefits are not necessarily doing anything wrong, since the tax code allows changes in basis. The agency's proposed new rules probably will be challenged in court. "I don’t think it's tax evasion at all," Kovacev said. "That has a fraudulent tinge to it that I don't think exists here. It's a tax planning tool that follows what Congress said you can do." The IRS on its own can't stop basis shifting, Kovacev argued. "If Congress wanted to change the rules to prohibit basis shifting between related parties, they can do that, but it's Congress's job to do that."