On February 7, 2022, the IRS’s Large Business & International Division (“LB&I”) announced a new compliance campaign focusing on partnership losses in excess of a partner’s basis. The campaign will center on ensuring that partners reporting flow-through losses from partnership have adequate outside basis to deduct them. If a partner does not have adequate outside basis in its partnership interest, Section 704(d) requires the losses to be suspended. The IRS explained that the campaign was identified through data analysis performed by LB&I and through suggestions from IRS employees. The campaign aims to improve return selection and identify issues with the greatest risk of non-compliance.
Please click here to read the full article.