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Robert Kovacev Quoted on the IRS's New Rules for Large Partnerships in Bloomberg Tax

"Planned IRS Rules on Partnership Maneuver Exposed to Challenges"

Bloomberg Tax

Robert Kovacev commented on the Internal Revenue Service's (IRS) recently introduced plan to combat tax avoidance by large partnerships using basis shifting transactions, aiming to generate over 50 billion dollars in revenue over 10 years. This plan includes increased reporting requirements, a revenue ruling on economic substance, and two proposed regulations targeted at creating a related-party exception to the current tax code, which permits partnerships to adjust basis in certain circumstances. Kovacev predicted that the IRS's new regulations will face legal challenges. "What Treasury is trying to do is essentially write a new section of the statute that Congress didn't enact," Kovacev said, adding there are legitimate non-tax business reasons for partnerships with related parties to want to distribute property or relinquish its partnership interest.