On August 16, 2022 President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law.

The IRA  includes a 15% corporate alternative minimum tax, a 1% excise tax on stock buybacks and a two-year extension of the excess business loss limitation rules. The IRA also contains a number…

On August 7, the Senate passed the Inflation Reduction Act of 2022 (the “IRA”).  The tax provisions in the bill that was passed vary from the bill that was originally released on July 27, 2022 by Senator Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer (D-NY) in four significant…

On August 7, the Senate passed the Inflation Reduction Act of 2022 (the “IRA”). The IRA contains a significant number of climate and energy tax proposals, many of which were previously proposed in substantially similar form by the House of Representatives in November 2021 (in the “Build Back Better Act”).…

On July 27, 2022, Senator Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.) released the Inflation Reduction Act of 2022 (the “IRA”). The IRA contains only two non-climate and non-energy tax proposals – a 15% corporate alternative minimum tax and a provision significantly narrowing the applicability of preferential…

On March 28, 2022, the Biden Administration released the Fiscal Year 2023 Budget, and the “General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals,” which is commonly referred to as the “Green Book.”  The Green Book summarizes the Administration’s tax proposals contained in the Budget. The Green Book is…

The recent decision of the First-tier Tribunal (FTT) in BlueCrest Capital Management (UK) LLP v HMRC (29 June 2022) is the first time the UK’s salaried member rules (the Rules) have been considered in the context of an asset management limited liability partnership (LLP). BlueCrest is engaged in providing hedge fund investment management services. In summary, the FTT found that certain of BlueCrest’s members who were responsible for managing significant investment portfolios had ‘significant influence’ over the affairs of the LLP, irrespective of whether that influence on a financial level amounted to managerial influence over the whole of the LLP’s affairs, such that those members were not salaried members (but that other members who were not engaged in portfolio management did not have significant influence for these purposes, as explained below).

 The decision in respect of the significant influence condition for portfolio managers will be welcomed by asset management LLPs. However, it is generally expected that HMRC will appeal the decision, particularly given that it appears to be at odds with HMRC’s approach, as set out in the HMRC Partnership Manual, that only members involved in the top level management of an LLP should treated as having significant influence over its affairs.

On March 28, 2022, the Biden Administration proposed certain limited changes to the taxation of partnerships. In short, the Administration’s proposals would (i) prevent related partners in a partnership that has made a section 754 election from basis shifting to reduce taxable income;[1] and (ii) make two helpful changes to the partnership audit rules.

I. Prevent Basis Shifting by Related Partners

Under current law, if a partnership with appreciated non-depreciable assets and depreciable or amortizable assets makes a “section 754 election” and distributes the appreciated non-depreciable assets on a tax-free basis to one partner, the other partners are entitled to “step-up”, or increase, their basis in the depreciable or amortizable assets. This allows them to claim increased depreciation or amortization deductions or generate losses from assets to be sold.  These transactions are known as “basis bumps”.

Summary and Background

On 11 May 2022, the European Commission (the “Commission”) published its draft proposal for a debt-equity bias reduction allowance (“DEBRA” or, the “Directive”), which forms part of the Commission’s Communication on Business Taxation reforms which were first outlined on 18 May 2021.  The Directive seeks to remove tax as a weighted factor in the choice of funding for companies and encourage the use of equity investments.  The perceived view of the Commission is that debt is usually favoured over equity due to the fact that most tax systems allow for the deduction of interest on debt, while costs relating to equity financing are usually non-tax deductible.