Lookthrough issueserisa code#

1231 loss recapture rule to which he would have been subject had the LLC sold the 1250 capital gain property.

Lookthrough issueserisa code#

1231 gain, meaning that Russell is not subject to the five-year Code Sec. Note that the 1(h) Proposed Regulations make clear that there is no look-through rule for Code Sec.

Russell's remaining $600,000 gain is residual long-term capital gain and is taxed at the 20% long-term capital gain rate. §1.1(h)(b)(3)(ii), Russell has 'section 1250 capital gain' in an amount equal to what he would have been allocated had the LLC sold all its section 1250 capital gain property in a fully taxable transaction: 1231 losses from the sale of non-LLC assets. During the five-year period prior to the sale, Russell has recognized Code Sec. The sole asset of the LLC is a building (the land is ground leased) that had been acquired for $2,000,000, and has a present tax basis of $1,200,000 and a fair market value of $3,500,000. Assume Russell owns a 40% membership interest in Office Building LLC. Let's look at a simple example of the 'look-through' rule contained in the 1(h) Proposed Regulations. After the 1997 Tax Act, many tax professionals suggested that perhaps the gain from a sale of a partnership interest in a partnership owning such property would only be taxed at 20%, i.e., there would be no 'look-through.' The issue is the tax treatment of a sale of a partnership interest where the partnership owns property containing section 1250 capital gain property. What has been a controversial issue since the passage of the 1997 Tax Act (and as deemed clarified by Congress in a footnote in the 1998 Tax Act), has been put to bed by the 1(h) Proposed Regulations. The 1(h) Proposed Regulations-No Surprise This month's Partner's Perspective will discuss these new Proposed Regulations. 1223 (the '1223 Proposed Regulations') and addresses the holding period of a partnership interest where the partnership interest is 'acquired' at various times.

The second set of proposed regulations was issued under Code Sec. 408(m), that, if sold directly, would be taxed at 28%). 1(h) (the '1(h) Proposed Regulations') and addresses the treatment of the sale of an interest in a flow-through entity where the entity holds section 1250 capital gain property (basically, depreciable real property, to the extent of depreciation taken that would not be recaptured as ordinary income) or collectibles (i.e., property, such as art work, coins, etc., defined in Code Sec. The first set of regulations was issued under Code Sec. Earlier this month the IRS issued, in tandem, two sets of new proposed regulations addressing certain issues involving the sales or exchanges of interests in partnerships, S corporations and trusts.