CONTROVERSIAL RULING REQUIRES GAIN TO BE RECOGNIZED ON DISTRIBUTIONS FROM MERGED PARTNERSHIP

Rev. Rul. 2004-43 is a departure from existing guidance in the Regulations concerning partnership mergers, insofar as it mandates a "restarting" of the 7-year measuring period that is crucial to the anti-mixing bowl rules. The impact on transactions already undertaken may be dire, as taxpa...

Full description

Saved in:
Bibliographic Details
Published in:Journal of Taxation 2004-08, Vol.101 (2), p.71
Main Authors: Karen Garre Lohnes, Schmalz, John G
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Built-in gains & losses
Consolidation
Corporate taxes
Distribution of partnership interests
Income taxes
Partnership interest
Rev. Rul. 2004-43
Revenue procedures & rulings
Tax basis
Tax regulations
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Rev. Rul. 2004-43 is a departure from existing guidance in the Regulations concerning partnership mergers, insofar as it mandates a "restarting" of the 7-year measuring period that is crucial to the anti-mixing bowl rules. The impact on transactions already undertaken may be dire, as taxpayers may have to choose between the Scylla of unwinding an existing arrangement and the Charybdis of challenging the Ruling in court as contrary to the Regulations. The issuance of Rev. Rul. 2004-43 leaves taxpayers and practitioners in a difficult position with respect to transactions entered into in reliance on what was clearly the better reading of the only IRS guidance on the issue, i.e., Reg. 1.704-4(c)(4). These taxpayers and practitioners must now decide whether to challenge the Ruling as inconsistent with the Service's own Regulation - not a comforting thought - or to restructure, or possibly unwind, the original transaction. Fairness and the sound administration of the tax law dictates that if the IRS does not revoke the Ruling, it should at a minimum grant transition relief.
ISSN:0022-4863