Impact of Business Interest Expense Limitation Regs. On Partner Redemptions

The following article, Impact of business interest expense limitation regs. on partner redemptions, originally appeared in the May 2023 issue of The Tax Adviser.

The already considerable challenge of properly characterizing and reporting partnership redemption transactions has only grown more Byzantine due to new basis adjustments under Section 163(j). These basis adjustments include those for partners under Treas. Reg. §1.163(j)-6(h), finalized and revised in September 2020, and those for partnerships under corresponding proposed Treas. Reg. §1.163(j)-6(h)(5), which were also issued in September 2020. 

This article analyses two related examples of partner redemptions – with and without Section 163(j) basis adjustments – to highlight and clarify both the existing and new issues.

Read the details BDO’s Tommy Orr provides on “with and without” Section 163(j) examples in his full article in The Tax Adviser.