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PROPOSED REGS CLARIFY PARTNERSHIP COMPENSATION ISSUES
May 24, 2005
The Treasury has issued proposed regs that, if finalized, will answer some long-nagging questions on partnership taxation. This will make it much easier to use partnership and LLC equity as compensation.
The regulations cover a lot of ground, and we're far from fully grasping them. The most important point we've noted so far: partnerships won't recognize gain from the issuance of partnership interests. This will enable taxpayers to use LLC options without worrying about triggering gain on exercise to old partners.
We will discuss this more as we get the opportunity; in the meantime Professor Maule already has some thoughts on the proposed regulations.
Links:
Proposed regulations.
Notice 2005-43, containing proposed revenue procedure on taxation of partnership interests.
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