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Operating Agreement Tax Provisions

by admin on April 11th, 2021

8. Tax returns. The enterprise agreement should also provide for the timely filing of all necessary tax returns and the delivery of K-1 schedules to all partners. It is likely that a non-dominant partner will want to add the right to sufficient information to be able to make estimated quarterly tax payments. 3. Partnership delegate. A clear indication that you have an outdated enterprise agreement is the absence of the concept of “partnership representative.” In the past, this provided for a “tax partner” in most agreements, a role that has been essentially replaced by the “partnership officer” under the Bipartisan Budget Act 2015 (bbA). The BBA has introduced a new centralized partnership review system, which generally applies to fiscal years from December 31, 2017. The new rules allow the IRS, for the review, to assess the tax debt for previous years at the partnership level during the year of the IRS decision. Therefore, if certain elections are held, a current partner who was not a partner in the review year could be subject to an unexpected tax debt. Partners should therefore take into account the applicability of the various elections, including the choice to fully opt out of the new audit rules, and include their preferences in the agreement. In addition, the partnership representative should be carefully selected, since from the IRS`s perspective, that person will have the exclusive authority to represent the partnership in the IRS procedures and to accept comparisons. The other partners should nevertheless negotiate notification and monitoring rights in the agreement, but it is important to keep in mind that these contractual provisions are not binding on the IRS.

This article is only intended to highlight some of the tax problems that may arise as part of your business agreement and should not be considered as a substitute for individualized tax advice. If you have questions about tax issues in corporate contracts, call your tax advisor or please contact me. It is important to get through the exercise, think about these topics and make a plan. It is also important to ensure that you operate the business in the appropriate form (e.B. LLC, S-Unternehmen or C-Unternehmen). 2. Tax decisions. It is important to think about the role that non-controlling partners will play in important tax decisions. One of the advantages of partnerships (and PARTENARIATS that are treated as partnerships) is that they generally offer the possibility of a single level of taxation exclusively at the partner level. Partners who want to ensure that the business continues to be treated as a debit for U.S. federal income tax purposes should prohibit the partnership from choosing the status of the business without the consent of any partner.

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