Newsflash: Tax Court Reverses IRS Revenue Ruling

July 17, 2017

A recent U.S. Tax Court case, Grecian Magnesite (149 T.C. No. 3, July 13, 2017), has declared invalid the long-standing U.S. government position that a non-U.S. person’s sale of an interest in a partnership (in this case, a U.S. limited liability company that was treated as a partnership for U.S. income tax purposes) doing business in the United States is automatically subject to U.S. federal income tax. This decision, if not overturned on an appeal, opens the door to different, potentially more tax-efficient structures for non-U.S. persons investing in U.S. partnerships that are doing business in the United States.

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