On November 2 President Obama is expected to sign into law a completely new partnership and LLC audit law that will enable the IRS to collect tax due from partnership and LLC audits from closely held and family partnerships and LLCs unless the partnership or LLC elects not to have this law apply. If the partnership or LLC has a partner or member that is itself a partnership or LLC, it may not elect out. These rules will apply starting in 2018.
The election must be done each year with a timely filed income tax return and requires the partnership or LLC not only to notify the partners and members of its election but also to disclose to the IRS the name and taxpayer identification number of every one of its partners and members.
It is important that this election be made every year by all family partnerships and LLCs.
Mr. Hendel has been practicing wealth preservation planning for over thirty -five years.