Tax Notes Quotes Monte Jackel on New IRS Regulations

Monte Jackel, senior counsel in the tax practice at Akin Gump, was quoted by Tax Notes in two separate articles addressing new regulations issued by the Internal Revenue Service (IRS).

“IRS Moves to Curtail Cross-Border Partnership Transfers” discusses regulations that, the article notes, are meant “to prevent taxpayers from contributing property to partnerships that allocate income or gain from the contributed property to related foreign partners not subject to U.S. tax.” Jackel said the regulations “are extraordinarily complex” and provide “very useful, general guidance.”

Jackel also said that because of certain language in the regulations, the statute may end up being applied overly inclusively. The IRS was, however, responsive to some earlier comments it received, according to Jackel, and included useful rules, such as a clarification that certain technical terminations will not be treated as transfers that trigger the rules.

Finally, Jackel questioned the part of the notice in which partnerships are not forced to use the remedial allocation method, which had been prohibited. The government, he said, has argued that taxpayers were not being forced to use that method, but he added, “What sense does it make for anyone to say that subjecting yourself to full taxation of all the built-in gain doesn’t mean you are forced to use the remedial method? It’s a false choice.”

In the second article, “Much-Anticipated Proposed Partnership Audit Regs Released,” Jackel said the scope of new audit regulations could cause some to question their legitimacy. He notes that the government “very logically says that they are taking an expansive view of what items are subject to the partnership-level audit,” but he also casts doubt on whether the statutory language is being read properly.

Jackel said Treasury and the IRS could have taken more time to issue the proposed regulations, because the statute applies for partnership-level adjustments for tax years beginning after December 31, 2017.