My question pertains to the intersection of partnership tax law, partnership tax accounting, IRC S 165 "abandonment of de facto partnership interest due to fraud", and Chapter 7 no asset, no liability filing, filed prior to BK Reform Act (Chapter 7 filed 2/2005).
On Schedule B was listed a 1/7th interest in a family limited partnership/de facto partnership - the valuation never determined or intentionally withheld from debtor due to family fight - the fight incurring legal fees that led to 1/7th partner being forced to file Chapter 7, with counterclaims for malpractice against attorneys who represented debtor in family fight.
Debtor discharged, but case not closed. Debtor wants to file with IRS an amendment to tax return (even though BK case not yet closed) declaring that the 1/7th interest is being abandoned due to fraud (of other LP members, their attorneys, and accountants). We've demanded tax bases if the interest - no one complying.
Has anyone seen this type of situation? Did the IRS accept the abandonment due to fraud amendment under S 165 without then requesting a full audit (keeping in mind Bk case not yet closed, although discharge occured for debtor). Are they any negative (and positive ramifications) to filing under S 165 for abandonment of the interest due to fraud.
Comments based on experience welcomed and sought.
On Schedule B was listed a 1/7th interest in a family limited partnership/de facto partnership - the valuation never determined or intentionally withheld from debtor due to family fight - the fight incurring legal fees that led to 1/7th partner being forced to file Chapter 7, with counterclaims for malpractice against attorneys who represented debtor in family fight.
Debtor discharged, but case not closed. Debtor wants to file with IRS an amendment to tax return (even though BK case not yet closed) declaring that the 1/7th interest is being abandoned due to fraud (of other LP members, their attorneys, and accountants). We've demanded tax bases if the interest - no one complying.
Has anyone seen this type of situation? Did the IRS accept the abandonment due to fraud amendment under S 165 without then requesting a full audit (keeping in mind Bk case not yet closed, although discharge occured for debtor). Are they any negative (and positive ramifications) to filing under S 165 for abandonment of the interest due to fraud.
Comments based on experience welcomed and sought.
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