State Taxation of Partnerships
Project Description
At its meeting in April 2021, the Uniformity Committee took up a project on state taxation of partnerships based on the
recommendations of the Standing Subcommittee that a work group be established to consider issues affecting:
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- Sourcing of partnership operating income and partnership items for state tax purposes;
- Sourcing and taxation of gains and losses from the sale of partnership interests;
- Entity level taxation issues including transfer pricing or combined filing issues; and
- Other administrative and enforcement issues including information reporting and withholding.
On this project page, you will find:
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- information about upcoming and past meetings
- whitepaper outline drafts
- written comments and feedback
Upcoming Meeting Notice
Agenda
Next Meeting – Wednesday, September 20, 2023 – 3:00 p.m. Eastern
I. Initial Public Comment
II. Status Report – Overview of Project Status
– Slides for the call – PDF Version & PowerPoint Version
III. Review of Guaranteed Payment Issue –
– Current Version of White Paper – PDF Version & Word Version
– (See additional information below.)
IV. Discussion and Decision on Guaranteed Payment Model (Possible Vote)
V. Review of Investment Partnership Draft Model (Time Permitting)
– Current Version of Draft Model (See additional information below.)
VI. Wrap Up and Discussion of October Meeting
VII. Adjourn
Dial-in/Log-in Information
Join from your computer, tablet or smartphone.
https://www.gotomeet.me/LilaDisque/work-group—state-taxation-of-partnerships
You can also dial in using your phone.
United States: +1 (872) 240-3412
Access Code: 208-267-469
Telephone participants will be muted if their line causes interference with the call; to un-mute your line, please press *6.
If you experience any kind of difficulty participating in the meeting, please contact MTCVirtualSupport@mtc.gov.
Project Materials
Latest Documents – By Subject
Partnership Issue Outline
The work group began this project by drafting a Partnership Issue Outline that identifies and generally describes a comprehensive list of potential issues and notes the relationships between those issues.
Current Version
- Partnership Issue Outline (Word) as of January 12, 2023
Past Versions
- Partnership Issue Outline as of August 22, 2022
- Partnership Issue Outline as of October 18, 2021
- Partnership Issue Outline as of October 2, 2021
- Partnership Issue Outline as of September 23, 2021
- Partnership Issue Outline as of August 26, 2021
- Partnership Issue Outline as of August 26, 2021
- Partnership Issue Outline as of August 10, 2021
- Partnership Issue Outline as of March 15, 2021
Subchapter K Training
The work group directed MTC staff to provide an online basic training on Subchapter K. The free training is available to state tax administrators who request access by emailing Chris Barber.
Investment Partnerships
At the December 10, 2021 Partnership Work Group meeting, the Work Group decided to begin developing generally recommended practices or positions for the state tax treatment of investment partnerships. The Work Group first drafted a White Paper on Investment Partnerships and then drafted a Model Statute. Upon further discussion and comment, the work group determined that a Model Regulation would better address this issue because the treatment of investment partnership income is already supported by state law, and a regulation would provide greater certainty in fact-specific situations. Current and prior versions of the white paper and model are below, along with written public comment.
Model Rule (with Comments)
Current Version
- REVISED Draft Model Rule in Regulation Form as of June 21, 2023 (PDF)
- REVISED Draft Model Rule in Regulation Form as of June 21, 2023 (Word)
Previous Versions
- Draft Model Rule in Regulation Form as of June 15, 2023 (Word)
- Draft Model Rule in Regulation Form as of June 15, 2023 (PDF)
- Investment Partnership Notes on Comments and Proposed Revisions of Draft Model – April 16, 2023 (PDF)
- Investment Partnership Notes on Comments and Proposed Revisions of Draft Model – April 16, 2023 (Word version)
- Written Comments from PwC – submitted April 4, 2023
- Written Comments from the ABA Tax Section – submitted Jan. 18, 2023
- Written Comments from the AICPA on the Investment Partnership Model – submitted Sept. 12, 2022
- Updated Model on Treatment of Investment Partnership Income – as of August 18, 2022 – with notes and comments
- Updated Model on Treatment of Investment Partnership Income – as of August 18, 2022 – clean
- Additional Comments from Bruce Ely & Kelvin Lawrence – August 1 2022
White Paper
Current Version
Previous Versions
Guaranteed Payments
At its February 15, 2023 meeting, the Work Group began addressing sourcing guaranteed payments from services. The Work Group has prepared a draft White Paper that provides background on the federal treatment of guaranteed payments, summarizes guaranteed payments issues addressed by the states, categorizes the different ways states source guaranteed payments, and provides related findings and recommendations. A draft of the White Paper, Proposed Findings and Recommendations on Sourcing of Guaranteed Payments, and a spreadsheet demonstrating different sourcing methods currently used by the states are avaialble below.
At the September 20, 2023 meeting, the Work Group directed staff to draft a model that sources guaranteed payments for services similarly to other items of distributive share.
Current Documents
- Proposed Findings and Recommendations on Sourcing of Guaranteed Payments (Word)
- Proposed Findings and Recommendations on Sourcing of Guaranteed Payments (PDF)
- Excel spreadsheet with simple guaranteed payment example
- Draft White Paper on Guaranteed Payments – April 16, 2023 (PDF)
- Draft White Paper on Guaranteed Payments – April 16, 2023 (Word version)
Additional Background Information
Prior Meeting Agendas, Materials, and Notes
Partnership Project Workgroup Agenda September 20, 2023
Status Report of the Work Group to the Uniformity Committee, July 25, 2023
Partnership Project Workgroup Agenda, July 19, 2023
Partnership Project Workgroup Agenda, June 21, 2023
Partnership Project Workgroup Agenda, May 24, 2023
Status Report of the Work Group to the Uniformity Committee, April 25, 2023
Partnership Project Workgroup Agenda, April 19, 2023
Partnership Project Workgroup Agenda, March 15, 2023
Partnership Project Workgroup Agenda, February 15, 2023
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- Guaranteed Payments – Staff Presentation February 15, 2023 (Slides)
- Guaranteed Payments – Staff Presentation February 15, 2023 (Video)
- Internal Revenue Bulletin: 2015-32 (which contains a history of the federal treatment of guaranteed payments)
Partnership Project Workgroup Agenda, January 18, 2023
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- Presentation Work Group Slides – January 18, 2023 (PowerPoint)
Older Meeting Archives
- Report to the Uniformity Committee – August 2, 2022
- Report to the Uniformity Committee – August 2, 2022 (PowerPoint)
- Slides – Recent Survey Results (PowerPoint)
- Revisions of Draft Model on Treatment of Investment Partnership Income – as of July 25, 2022 – (Word version with notes and comments)
- Revisions of Draft Model on Treatment of Investment Partnership Income – as of July 25, 2022 – (Word version clean)
- Notes from Partnership Call – July 11, 2022
- Written Comments Submitted – Bruce Ely
- Revisions to Draft Model on Treatment of Investment Partnership Income as of July 11, 2022 (Notes & Comments) and Clean Version
- Notes from June 27, 2022 Call
- Comments and Edits on Draft Model – Treatment of Investment Partnership Income – as of June 27, 2022 Meeting
- Notes from June 13, 2022 Call
- Draft Model – Treatment of Investment Partnership Income – June 8 2022 Version
- May 20, 2022 Draft of Investment Partnership White Paper (Word) – Slides for Meeting (PowerPoint)
- May 5, 2022 Draft of Investment Partnership White Paper with Findings and Recommendations and Slides for Call (PowerPoint)
- From the Uniformity Committee Meeting of April 20, 2022 – Presentation of Richard Prisinzano (PowerPoint)
- Status Report Slides April 20, 2022 (PowerPoint)
- Draft White Paper on Investment Partnerships as of March 22, 2022 and Slides for Meeting (PowerPoint)
- Update on Training and White Paper on Treatment of Investment Partnerships – Slides
- Update on White Paper on Investment Partnerships – Slides (PowerPoint )- January 18, 2022
- Update on White Paper on Investment Partnerships – Slides (PowerPoint)- January 4, 2022
- Recommendation of Staff on Next Steps – Training and White Paper on Treatment of Investment Partnerships
- Status Report to the Uniformity Committee Meeting on November 9, 2021
- Review of Updated Issue Outline – As of October 18, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of October 2, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of September 23, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of September 8, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of August 26, 2021 – Slides for Meeting (PowerPoint)
- Issue Outline – As of August 10, 2021
- Slides for First Partnership Work Group Meeting – June 15, 2021
- Staff Report – Partnership Issue Outline (March 2021) – Word Version – Partnership Issue Outline
- Final Recommendation – Project on State Partnership Taxation