Interest
Interest is not qualifying income if 1) it is earned in the conduct of a financial or insurance business, or 2) determination of the amount received depends in whole or in part on the income or profits of another person...
| August 25, 2015
Partnerships in Existence on December 31, 1987
Partnerships trading or in registration on or before December 31, 1987 were given a ten-year transition period during which they did not have to earn “qualifying” income as long as they did not enter a substantial new line of business....
| August 25, 2015
Which Publicly Traded Partnerships Are Taxed as Partnerships?
Under section 7704 of the Internal Revenue Code (I.R.C.), in order for a PTP to be taxed as a partnership (i.e., not taxed as an entity), 90 percent of its income must be “qualifying income” every year (after December 31, 1987)...
| August 25, 2015
Lack of Actual Trading
A partnership will not be considered readily tradable if the sum of the percentage interests in partnership capital or profits transferred during the tax year of the partnership (other than private transfers and transfers through qualifying redemption and repurchase agreements...
| August 25, 2015
Private Placements Exception
A private placement is a transaction (or transactions) that is not required to be registered under the Securities Act of 1933 (15 U.S.C. 77a et seq. There is an anti-avoidance rule that looks through tiered arrangements if their principal purpose...
| August 25, 2015
Matching Services Exception
Transfers through a qualified matching services---a computerized or printed listing system listing bid and/or ask quotes in order to match sellers with buyers--will be disregarded in determining whether partnership interests are readily tradable. Matching must occur either by matching the...
| August 25, 2015
Redemption or Repurchase Agreements
For purposes of the private transfer exception, the redemption or repurchase agreement must be exercisable only upon death, disability or mental incompetence of the partner; or upon the retirement or termination of services of a partnership manager or full time...
| August 25, 2015
Private Transfer Exception
Several types of transfers are exempted as private transfers not involving trading: Transfers in which the basis of the partnership interest in the hands of the transferee is determined by reference to its basis in the hands of the transferor,...
| August 25, 2015
Trading
Interests will not be considered to be “traded on an established securities market,” nor “readily tradable on a secondary market or substantial equivalent thereof,” unless there is a certain level of partnership involvement in the trading. The partnership must either:...
| August 25, 2015
Readily Tradable
Interests not traded on an established securities market are “readily tradable on a secondary market or substantial equivalent thereof” if the partners are readily able to buy, sell, or exchange their partnership interests in a manner that is economically comparable...
| August 25, 2015
