On January 1, 2018, new IRS regulations are set to go into effect which will have consequences for both limited liability companies (LLCs) and partnerships. A well-structured entity reaps many benefits—liability protection, tax savings and asset protection among them—so attention to the evolution of the new centralized partnership audit regime is critical.
Under the IRS’s proposed regulations (REG-136118-15), adjustments to income, gain, loss, deduction or credit—and any resulting underpayment—will be calculated at the level of the partnership or LLC rather than the level of the individual partner or member. In Part 3 of a series on the regulations, CGS3 partner and tax practice team chair Phil Jelsma breaks down the four adjustment groups, how an underpayment is determined and the procedures for requesting a modification.
The remainder of the series will continue to examine aspects and consequences of the regulations, including the role of the partnership representative and the consistency requirement.