ax Connections Spotlight Interview Part 2: Chuck Levun And Michael Cohen On Partnership Tax Planning Challenges, And Surprising Cases And Mistakes They Have Seen

For more than thirty-seven years, Charles R. Levun and Michael J. Cohen have been presenting the preeminent seminars on flow-through taxation. The two flagship Tax Forum programs are Fundamentals of Flow-Through® and Tax Planning Forum®.  Tax Forum is expanding its programs to include self-study (on-demand) training, as well as working on an additional course, which they will share with us soon.

Please read through Part 2 of this special interview, featuring Chuck Levun and Michael Cohen. Part 1 is focused on Tax Forum, its flow-through tax planning training programs, and the importance of education for CPAs, attorneys and other tax planning professionals.

To get a sense of how the Tax Forum programs are unique in the partnership, LLC and S Corporation tax training space, please register for Tax Forum’s complimentary webinar:

Avoiding Costly Mistakes: Four Essential Tax Concepts for the Non-Tax Business Attorney or CPA taking place on Thursday, May 16th at Noon CDT

Kat Jennings’ Question: Let’s jump right in …Do you see an increase in controversy in partnership taxation? Why or why not?

Michael Cohen’s Answer: For the most part, not yet. However, with the new budget for the IRS and the commitment to go after “large” partnerships, I would think that controversy will increase. However, for this commitment to be successful in shutting down “abusive” transactions, the partnership knowledge base of the IRS auditors will need to be expanded. I will note that virtually every year we have at least a half dozen IRS professionals attend either our Forum or Fundamentals courses.

Kat Jennings’ Question: What is the biggest challenge for partnerships going forward?

Chuck Levun’s Answer: Staying on top of developments is a biggie. There have been proposals floating around from Senator Wyden and others that would make substantive changes to some of the basic partnership principles. These changes are designed to hit perceived abuses of the partnership rules by large partnerships. Unfortunately, if enacted, they also would complicate life for the smaller partnerships, which are by far a large number of business entities and growing. Moreover, there are always new structuring techniques, new thought processes, etc. that are constantly being developed. Partnerships are such a dynamic area, given, as I said before, that partners have a tremendous amount of flexibility in structuring their transactions. It’s not like the S corporation arena where everything has to be shared on a pro rata basis, there can be only one class of stock, etc.

Kat Jennings’ Question: Tell us about any cases in partnership taxation that really surprised you.

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Tax Question, Ask Tax Expert
We want to defer guaranteed payments in a partnership and still show it as a liability in the financial statements for GAAP purposes; however not in the K-1’s (as this will generate taxable income). Is it possible?

TaxConnections provides an option for tax professionals to comment below on our Tax Blog; or if you are a tax professional and want to have your tax answer rise higher on the search engines and lead back to you,  please join us as a TaxConnections Member.

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Monika Miles

Do you take notice when it comes to new California tax laws and updates? Here is one that taxpayers and tax preparers alike will want to pay attention to.

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Pallav Acharya

There is a general rule that no gain or loss is recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership. However, there may be some opportunities for U.S. persons contributing property to U.S. partnership with foreign partners. The partnership can be either U.S. or foreign. Congress realized that due to the loophole, taxpayers might use a partnership to shift gain to a foreign person. Read More

Tax Partner/Tax Director- Family Wealth Expertise

TaxConnections has been retained by a client to locate an individual who has substantial tax expertise with high net worth individuals and a family office background. Our client is located in California and will be responsible for guiding the family in individual tax, trusts, estate tax, partnership tax, Subchapter S tax, gift tax, and private foundations.  Read More

September 15 –  Corporations

File a 2014 calendar year income tax return (Form 1120 or 1120-A) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension.

September 15 – S Corporations

File a 2014 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension.

September 15 – Corporations Read More

If you have a calendar year 2014 partnership, S-corporation, or trust return on extension, don’t forget the extension for filing those returns ends on September 15, 2015.

Pass-through entities such as Partnerships, S-corporations, and fiduciaries (trusts, estates) pass their income, deductions, credits, etc., through to their investors, partners, or beneficiaries, who in turn report the various items on their individual tax returns. Partnerships file Form 1065, S-corps file Form 1120-S, and Fiduciaries file Form 1041, with each partner, shareholder, or beneficiary receiving a Schedule K-1 from the entity that shows their share of the reportable items.

If all of the aforementioned entities could obtain an automatic extension to file their returns Read More


The three month highway funding extension was passed by the House July 29 and by the Senate July 30. The president signed the bill into law on July 31. The law contains several important tax provisions changing the due dates for partnership and C corporation returns, FinCEN Form 114-Report of Foreign Bank and Financial Accounts (FBAR), several common tax returns and several other IRS information returns It also overrules the Supreme Court’s Home Concrete decision, requires that additional information be reported on mortgage information statements, and requires consistent basis reporting between estates and beneficiaries. Read More

File An Automatic Extension Request TODAY – IRS Form 7004

The Business and Partnership Tax deadline is coming up fast! Don’t sweat it!

File IRS Form 7004 to apply for Automatic Extension of Time to File Certain Business Income Tax.

If you happen to be compelled, feel welcome to check out the instructions for IRS Form 7004.

If you need help, contact me and one of my trusted lieutenants will take care of this for you TODAY. Read More

Last Tuesday, IRS Commissioner John Koskinen addressed the New York State bar Association Tax Section in New York. His comments provide keen insight into the going-on’s at the IRS. Mr. Koskinen’s most important announcement centered on the agency’s anticipated reduction in the number of rulemaking projects as a result of budgetary constraints.

Although releasing guidance is one of the agency’s core functions, there are simply not enough attorneys in the Office of Chief Counsel to shoulder the burden. Nor are there any plans on the horizon to hire more workers, in light of the agency-wide hiring freeze.

“Our office of chief counsel continues to make every effort to issue guidance in a timely Read More

We Have Been Waiting For This!

The IRS has released IRS Notice 2015-13, which provides transition relief given the late retroactive renewal of the Work Opportunity Tax Credit program in December 2014. Notice 2015-13 waves the 28-day deadline for submitting IRS Form 8850 (the WOTC Pre-screen Notice) for qualifying employees hired in 2014.  The extended deadline for submitting the applications for affected employees is now April 30, 2015.

From the Notice:


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In 1997, the IRS issued proposed regulations governing when the distributive share of partnership income for Limited Liability Company (LLC) members was to be included in self-employment income. It basically advised that an LLC member would be treated as a limited partner — and thus the distributive share would NOT be self-employment income– unless the LLC member either:

• had personal liability for the debts of the LLC under state law (this would be pretty rare)
• had authority under state law to contract on behalf of the LLC, or
• participated in the trade or business of the LLC for more than 500 hours during the year.

This is significant because the treatment of an LLC member’s distributive share of Read More