John G. Hodnette

Forfeiture of Unvested Profits Interests

Pursuant to Rev. Proc. 2001-43, recipients of unvested profits interests are treated as partners on the date of grant regardless of whether they make Section…

Assignment of Income Doctrine

The assignment of income doctrine was established in Lucas v. Earl, 281 U.S. 111 (1930). It is a judicial doctrine that requires income earned by a taxpayer…

Basics of Section 409A

Section 409A addresses the taxation of nonqualified deferred compensation plans. A nonqualified deferred compensation plan is any arrangement that provides…

Taxation of Cooperatives Under Subchapter T

Tax practitioners are familiar with Subchapter C (C corporations), Subchapter K (partnerships), and Subchapter S (S corporations) but are generally less…

Section 351

Section 1032 provides no gain or loss is recognized by a corporation on the issuance of its stock to a new owner, whether in exchange for cash or otherwise.…

Section 754 Elections

A partnership may elect to adjust its inside basis under Sections 734(b) and 743(b) by making a Section 754 election with the partnership’s annual tax…

Transfers of Property Between Divorcing Spouses

Prior to the Tax Cuts and Jobs Act of 2017, transfers between spouses or former spouses incident to divorce were treated as either (a) nontaxable transfers…

Claim of Right Doctrine of Section 1341

Under the claim of right doctrine, a taxpayer who receives income under a claim of right that is free of restrictions must include the amount in income in the…

Partnership Representatives

Congress adopted new partnership audit rules as part of Bipartisan Budget Act of 2015 (“BBA”), replacing the Tax Equity and Fiscal Responsibility Act of…

Allocation of Income When a Partner Leaves a Partnership

The allocation of income when the ownership of an S corporation changes is discussed in my previous article Section 1377(a)(2) Elections for S Corporations.…