The American Bar Association Section of Taxation issued a letter to IRS Commissioner Douglas Shulman requesting guidance on partnership allocations permitted under the "fractions rule" as described in Internal Revenue Code section 514(c)(9)(E). The letter addresses specific issues that arise under the fractions rule in transactions regularly undertaken by real estate funds with certain tax-exempt organizations, with comments focusing on disregarded allocations, changes in interests, and tiered partnerships. According to the ABA, "the fractions rule often thwarts legitimate business arrangements," and the ABA hopes that the IRS and Treasury will make changes to the fractions rule to eliminate significant problems that arise in common transactions.
See Stuart M. Lewis, letter to IRS Commissioner Douglas Shulman Re: Comments Concerning Partnership Allocations Permitted Under Section 514(c)(9)(E), 2010 TNT 12-22, January 19, 2010.
Posted by Jenny Robertson, Associate Editor, Wealth Strategies Journal.
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