United States: Renkemeyer Compounds The Confusion In Characterizing Limited And General Partners—Part 1

Originally published in Journal of Taxation

The evolutionary pressures that led to the adoption of the check-the-box Regulations are continuing to bear against the issue of the federal tax characterization of a "partner" as "general" or "limited." A recent Tax Court decision highlights the problems and possible solutions.

An ongoing question is who or what, for tax purposes, is a "limited partner" or "general partner" of an unincorporated business entity taxable as a partnership. The answer can result in substantial adverse—or favorable—tax consequences for the members of the tax partnership, under the numerous Code and regulatory provisions that use those terms. For example:

• By operation of Section 1402, an individual member of an unincorporated business entity who already has paid the maximum OASDI portion of the self-employment (SE) tax with respect to other income must pay the unlimited 2.9% HI tax component if she is classified as a "general partner." Alternatively, a member who is classified as a "limited partner" may avoid that tax on her allocable share of partnership income, but cannot make contributions to a qualified retirement plan with respect to her distributive share of partnership income.
• By operation of Section 469, a tax partner classified as a "limited partner" may not be able to meet the (restricted) material participation tests under Temp. Reg. 1.469-5T, for purposes of the passive activity rules, while classification as a "general partner" would permit the tax partner to satisfy additional, alternative tests not otherwise available.
• A tax partnership may be able to deduct payments (in the year paid) under Section 736(b)(3) to withdrawn or retired members who were deemed "general partners" for purposes of that section, while payments to those members not classified as "general partners" will not be currently deductible.

For the past 32 years, your author has thought about and written on operative provisions of the tax law that, directly or indirectly, focus on the distinction between types of members of unincorporated business entities that are taxable as partnerships.¹ There is surprisingly scant guidance (in the form of statutes, Regulations and other administrative guidance, and case law) addressing this topic. The initial focus was on the tax distinctions between general and limited partners in a limited partnership organized and operated under state law, and it expanded to considering whether the members of other types of state law unincorporated limited liability entities, e.g., LLCs, LLPs, and LLLPs (collectively, along with state law limited partnerships, "limited liability entities" or "LLEs")² could be shoehorned into either "limited partner" or "general partner" status for tax purposes.

The identification of issues and the analysis contained in the Tax Distinctions article remain relevant today. Although the 1979 article predated new types of LLEs whose members by statute have the hybrid characteristics of both general and limited partners, that article dealt with the same question that remains unresolved: Do we characterize for various operative federal tax purposes a tax partner as being a "limited partner" or a "general partner" if for state law purposes she exhibits some of the characteristics of a general partner and some of the characteristics of a limited partner?

The Tax Distinctions article, published when the only widely used unincorporated business entities were general and limited partnerships, focused on a putative limited partner who took part in the control of the business and thereby became "liable as a general partner" under section 7 of the Uniform Limited Partnership Act (ULPA) (1916). Pursuant to the terms of the then-applicable statute and the partnership's limited partnership agreement, that partner had the (limited) rights of a limited partner but the unlimited liability of a general partner by operation of statute (due to his taking part in the control of the business, his contribution being solely of services, or the limited partnership's use of his name in the business³).

With respect to today's LLEs, state statutes provide certain general-partner-like rights or powers to certain or all of the members (e.g., granting management and authority rights to all members of member-managed LLCs, managers of manager-managed LLCs, the partners of LLPs, and the general partners of LLLPs), while generally providing limited liability protection to all LLE members (except the general partner of a state law limited partnership). Again, the bedrock issue is this: For purposes of each of the numerous operative provisions of the Code and Regulations, is each type of member of an LLE to be treated as a "limited" or a "general" partner?

The characterization of a member as a "limited partner" or "general partner" may be taking on increased importance in light of the recently enacted Section 1411, which imposes a tax on income that represents a "return on invested capital" for individuals who meet a certain income threshold. Under that section, certain passive or "unearned" income of individuals will be subject to a 3.8% "Medicare contribution" tax beginning in January 2013. The Section 1411 tax was specifically designed to parallel the uncapped HI portion of FICA and SECA taxes that apply to "earned" income. The technical explanation of the provision by the Staff of the Joint Committee on Taxation (JCT) states that the new tax will not apply (among other things) to amounts already subject to the HI portion of the SE tax under Section 1401(b).⁴ It has been observed that the enactment of Section 1411 "further underscores the need for clarification regarding the application of Section 1401 (including the application to a 'limited partner')."⁵

In this Part 1, we first describe the nearly century-long state law evolution of LLEs. In preparation for the ensuing tax analysis, it is helpful to understand the evolution of LLEs and the changes in members' limited liability and level of permissible activity or participation allowable under state law for each form of LLE. The state law evolution of LLEs is interwoven into Exhibit 1, "The 'General Partner' and 'Limited Partner' Timeline."

We next identify definitional deficiencies and uncertainties under the tax law in characterizing members of LLEs. We then explore nearly 20 different ways that the terms "limited partner" and "general partner" may be defined for tax purposes. As will be seen, Treasury, the IRS, and the courts have not been consistent in their approaches. We have attempted to identify the merits and weaknesses of each alternative, in our search for the best way to define those terms.

The focus then shifts to how "limited partner" and "general partner" are defined in those Code provisions where either or both of the terms arise most frequently in practice. There is limited guidance (i.e., final or Proposed Regulations, Rulings, and case law) as to the members' tax status provided under some of these provisions. This leads us to question whether a comprehensive or a section-by-section approach would be the preferred solution.

Part 1 of this article concludes by analyzing the tax law classification of members of LLEs by topic, i.e., the characterization of members of state law limited partnerships, LLLPs, LLCs, and LLPs, respectively, as "limited" or "general" partners for tax purposes.

Part 2 of the article will focus on the Tax Court's curious opinion earlier this year in Renkemeyer, Campbell & Weaver, LLP, 136 TC 137 (2011). There, the court ruled that members of a law firm operating as an LLP were not "limited partners" for purposes of avoidance of SE tax under Section 1402(a)(13) on their respective allocable shares of the partnership's income.⁶ The court's method of analysis may foreshadow how it (and other courts) will characterize members of other unincorporated business entities for purposes of the dozen Code and 70-plus Regulations provisions that provide differing tax consequences for "limited partners" and "general partners."

If the Tax Court's methodology is broadly applied to situations other than under Section 1402(a)(13), those members may be characterized as "limited partners" for some tax purposes and "general partners" for others—a logically inconsistent, sometimes unpredictable, but oftentimes appropriate result, in our view. Moreover, by signaling that LLP and LLC members are not automatically "not limited partners," Renkemeyer is inconsistent with the analytical method used by the Tax Court (and some other courts) in cases under Section 469.

As will be discussed in Part 2, Renkemeyer sheds some light on the Tax Court's characterization for tax purposes of members of LLPs and other unincorporated entities while simultaneously leaving many questions unanswered, raising additional questions, and creating more than a little confusion. (The AICPA and others have called for regulatory guidance in light of the uncertainty that Renkemeyer has added to the treatment of limited partners and LLC members.⁷) Renkemeyer also has reignited interest in a topic that percolated politically in the late 1990s—the SE tax liability of state law limited partners who provide services to their partnerships.

Part 2 of this article also will analyze the characterization of members of unincorporated business entities as "limited partners" and "general partners" in light of Renkemeyer and other recent judicial developments. We first will analyze Renkemeyer with respect to its classification of LLP members for purposes of Section 1402(a)(13). After identifying questions left unanswered by the court's decision, we will then focus on whether Renkemeyer provides guidance for purposes of the classification of members of unincorporated entities other than LLPs under Section 1402(a)(13). Finally, and perhaps most important, we will discuss whether Renkemeyer signals how the Tax Court (and perhaps other courts) will classify members of LLEs as limited or general partners for purposes of other operative Code provisions (e.g., Sections 469, 736, 752, 1256, and 6231 ).

The analysis in Part 2 also will cover recently Proposed Regulations under Sections 469 and 892 that define "limited partners" in a fashion that also may be extended to certain operative Code provisions currently lacking such guidance. Indeed, these new Proposed Regulations may signal that Treasury and the IRS view Renkemeyer as justification for abandoning reliance on the state law characterization of members of tax partnerships as being "limited partners" or "general partners" for certain purposes under the Code.

STATE LAW EVOLUTION OF LLEs

Between 1979 and 2001, unincorporated business entities evolved dramatically, including the introduction and expanded use of LLCs, LLPs, LLLPs, and statutory trusts (which may include so-called "business trusts").⁸ In addition, there have been widespread alterations made to state partnership laws. The original 1916 version of the Uniform Limited Partnership Act (ULPA) had been substantially amended in 1976, was further significantly changed in 1985 (ULPA (1976) with 1985 Amendments), and was amended again in 2001 (ULPA 2001). Changes to the Uniform Partnership Act (UPA), originally adopted in 1914, occurred with the adoption of the Revised Uniform Partnership Act (RUPA) in 1992, as further amended in 1993, 1994, 1996 (which first featured LLPs), and most recently in 1997.⁹ General partnerships and LLPs are grounded in UPA and RUPA. Unincorporated business entity variants continue to evolve, in many cases on a state-by-state basis.

The state law evolution and development of LLEs also can affect the characterization and treatment of the entities' members for tax purposes. As a result of nomenclature and, in some instances, profound differences in legal structure, it has been difficult to devise a uniform approach to characterizing members of all types of LLEs in all jurisdictions under the myriad federal tax statutes and Regulations.

To illustrate, the variations of limited partnerships permissible under state law have evolved to the point that the limited partner's potential powers, rights, and level of participation in management do not, in many aspects, resemble those of limited partners in limited partnerships originally contemplated by the Code and Regulations.¹⁰ In 2001 Congress was (erroneously) informed by the JCT Staff that under state law, a limited partner normally cannot participate in control of the partnership's business.¹¹

In fact, under many state statutes (having adopted ULPA (2001)), a limited partner now may fully participate in the business of a limited partnership (or LLLP) without incurring liability for claims against the entity. Nevertheless, it is now often difficult to distinguish between active owners of the business and passive investors (see Exhibit 2, "Limitations on Limited Partners' Activities," parts 3-6).

A number of examples involving LLCs illustrate how state law varies the members' powers and rights from those typically found in state law limited and general partnership statutes. For instance, the people who have agency authority and management rights in an LLC may not be LLC members themselves. Conversely, it is possible that no member will have agency or management rights. It also is possible that a member having agency authority will not have management rights and vice versa (unlike general partners). Furthermore, all members of an LLC may participate in the LLC's business without incurring liability for debts and obligations of the entity. Finally, the Uniform Limited Liability Company Act (ULLCA) (2006), enacted to date in Utah and the District of Columbia, eliminates statutory apparent authority, i.e., a member does not have apparent authority to bind the entity by statute solely due to his being a member.

The first generation of LLEs was epitomized by limited partnerships formed under ULPA (1916), in which passive limited partners obtained limited liability as the quid pro quo for not participating in the management or control of the partnership's business. The activities that limited partners could undertake without personal liability (other than for their own torts) were substantially increased by the 1976¹² and 1985 versions of ULPA. In all events, however, the general partner(s) of the limited partnership remained personally liable for those debts and obligations for which the partnership was liable ("recourse liabilities"), absent a contractual exculpation of the general partner(s).

The advent of the LLC marked the second generation of LLEs. Those entities generally provide liability protection to all of their members, even those fully participating in the entity's management and operation. LLCs generally are of two basic types:

• The member-managed LLC, whose management in some ways resembles that of a general partnership.
• The manager-managed LLC, whose management somewhat resembles that of a limited partnership.

In Rev. Rul. 88-76, 1988-2 CB 360, a properly formed (manager-managed) LLC received IRS approval for taxation as a partnership under then-applicable Reg. 301.7701-2. The advent of the check-the-box Regulations (Regs. 301.7701-2 and -3) effective after 1996 provided virtual certainty as to the tax treatment of domestic LLCs as partnerships (absent their election to be taxed as corporations).

More recently, LLPs (technically, state law general partnerships whose members are shielded by statute from personal liability for some or all of the partnership's debts), which

first became available in 1991, and LLLPs (technically, state law limited partnerships whose general partners also are shielded from personal liability for some or all of the partnership's debts) have come into vogue. For purposes of this article it is assumed that all LLEs under discussion are taxable as domestic partnerships under the check-the-box Regulations.

CHARACTERIZING LLE MEMBERS: DEFINITIONAL DEFICIENCIES AND TAX LAW UNCERTAINTIES

As the new or modified forms of LLEs gained acceptance and widespread use for business and investment purposes, the tax classification of members of those LLEs as being "general partners" or "limited partners" became relevant and pressing. This was particularly so in areas such as the determination of a member's net SE earnings under Section 1402(a)(13) and issues involving material participation by LLC members for purposes of the passive activity loss limitation rules in Section 469(b)(2) and Temp. Reg. 1.469-5T(e).¹³ Commentators (including your author) have continued to identify issues, propose solutions, and seek administrative guidance or legislation with respect to classifying members of LLCs, LLPs, LLLPs, and other unincorporated entities as being "limited partners" or "general partners" for tax purposes.¹⁴

There has been little progress in identifying the operative distinctions between "general partners" and "limited partners" for federal tax purposes since the 1979 publication of the Tax Distinctions article. There also has been little progress in characterizing as "general partners" or "limited partners" for tax purposes those members of LLEs (other than state law limited partnerships) who are treated as "partners" for federal and state tax purposes.¹⁵ In part, this lack of progress may be directly attributable to actions (and inactions) of Congress, as discussed below. At the same time, other tax and business laws have evolved in a way that places greater stress and importance on these distinctions.¹⁶ One thing that has not changed over the past 32 years: taxpayers still need guidance and tax advisors and return preparers still need to know how to apply numerous operative tax provisions to the owners of LLEs.

In the Tax Distinctions article, written when only traditional general and limited partnerships roamed the earth, we identified four viable approaches to defining "general partner" and "limited partner" for federal tax purposes:

1. By reference to state law definitions.

2. By reference to the partner's limited or unlimited personal liability for obligations of the partnership.

3. By reference to the partner's degree of activity or inactivity in the partnership.

4. By reference to both the partner's personal liability and degree of activity as relevant in the determination.

At that time, we failed to identify several additional approaches, e.g.:

5. By reference to the partner's apparent or actual authority to conduct the partnership's business (even if the partner did not use that authority¹⁷).

6. By reference to the partner's actual or apparent authority or ability to be an agent for notices to the partnership (i.e., notice to a general partner results in notice to the partnership; notice to a limited partner typically does not constitute notice to the partnership).

7. By reference to the partner's ability to dissolve the partnership (in absence of a provision in the partnership agreement to the contrary).

Relevant Tax Definitions

While "partnership" and "partner" are defined in the Code and Regulations for federal tax purposes, "general partner" and "limited partner" are not.¹⁸ Section 7701(a)(2) provides that "partnership" includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of the Code, a trust or estate or a corporation. "Partner" includes a member in such a syndicate, group, pool, joint venture, or organization. "Partnership" is further defined in Reg. 301.7701-2(c) as a business entity with at least two members that is not a corporation under Reg. 301.7701-2(b). "Partnership" and "partner" in Section 761 use the same language as Section 7701(a)(2), and Reg. 1.761-1 defines the terms by reference to the Regulations under Section 7701.¹⁹ There has been surprisingly little judicial interpretation of these terms, and the scant judicial guidance that existed before Renkemeyer has been uniformly limited to the particular operative Code provision at hand.

What will depend on an LLE member's tax classification as a "general partner" or a "limited partner"? Against this backdrop of evolving unincorporated business entities, there currently are 12 provisions in the Code, i.e., Sections 464, 465, 469, 736, 772, 988, 1256, 1258, 1402, 2701, 6231, and 9701, that refer to "general partners" and/or "limited partners." Of these, Sections 469, 1402, 736, and 6231, as well as the commonly defined Sections 464, 1256, and 1258, are of relatively greater importance in most tax practitioners' practice, and are analyzed below. Also there are over 80 references to "general partner" and "limited partner" in the Regulations,²⁰ which due to space limitations are beyond the scope of this article.

In addition to those Code sections and Regulations that expressly refer to "general partners" or "limited partners" for operative federal tax purposes, the categorization of partners and members of other unincorporated entities can have meaningful tax consequences in many other situations. Notwithstanding the absence of references to "general partner" and "limited partner" in those other provisions, a person's status for tax purposes as a "general partner" or "limited partner" (or their respective equivalents), and an analysis of the characteristics used to make those status delineations, can be relevant in determining operative tax consequences under those other provisions.

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Footnotes

1. See, e.g., Banoff, "Tax Distinctions Between Limited and General Partners: An Operational Approach," 35 Tax L. Rev. 1 (Fall 1979) (the "Tax Distinctions article"), and articles cited in note 14, infra.

2 References herein to "state law" are to domestic entities only (e.g., state partnership law as determined under state statutes for the organization and operation of partnerships), and for simplicity's sake include entities formed in the District of Columbia. References to state statutes or uniform acts adopted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) are so identified herein. It is recognized that one may own more than one type of interest in an LLE for state law purposes, e.g., as a limited partner and a general partner. References to "state law" do not refer to state tax law, i.e., the tax law applied by states to characterize owners of LLEs for tax purposes or for determining those owners' state income tax liabilities.

References to "limited partner(s)", "general partner(s)," and "limited" and "general" partners, when so designated in quotation marks, means those tax partners who are treated as such for federal tax purposes (regardless of their status for state law purposes). It is recognized that for federal tax purposes, one may hold interests as a "limited partner" and a "general partner" in the same tax partnership.

3 ULPA (1916), sections 7, 4, and 5, respectively.

4 Staff of the Joint Committee on Taxation, Technical Explanation of the Revenue Provisions of the "Reconciliation Act of 2010," as Amended, in Combination With the "Patient Protection and Affordable Care Act" (JCX 18-10, 3/21/10), page 135.

5 New York State Bar Association Tax Section, Report 1247, "Comments on the Application of Employment Taxes to Partners and on the Interaction of the Section 1401 Tax With the New Section 1411 Tax" (the "2011 NYSBA Report"). See Letter dated 11/14/11 from Jodi Schwartz, Chair, NYSBA Tax Section, reprinted at "NYSBA Tax Section Submits Report on Application of Employment Taxes to Partners," 2011 TNT 220-21 (11/14/11).

6 References herein to a partner's allocable share of partnership income generally include the allocable share of partnership losses as well, unless the context clearly requires the contrary.

7 See Letter from Patricia A. Thompson, Chair, AICPA Tax Division, transmitting "AICPA Tax Division Comments on the 2011-2012 Guidance Priority List (Notice 2011-39), June 1, 2011," reprinted at "AICPA Responds to Request for Guidance Priority List Topics," 2011 TNT 107-24 (6/1/11).

8 The Service addressed the tax classification of a Missouri business trust (another form of unincorporated organization used to conduct business activities) in Rev. Rul. 88-79, 1988-2 CB 361, and concluded that the trust would be taxed as a partnership. Several states have enacted statutes governing business trusts.

The Delaware statutory trust law illustrates the evolution of statutory business trusts. The statute adopts certain aspects of corporate law and the flexibility of partnership law. For example, section 3803 of the Delaware Statutory Trust Act states that "except to the extent otherwise provided in the governing instrument of the statutory trust, the beneficial owners shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the general corporation law of the State ... [and] except to the extent otherwise provided in the governing instrument of a statutory trust, the trustee, when acting in such capacity, shall not be personally liable to any person other than the statutory trust or a beneficial owner for any act, omission or obligation of the statutory trust or any trustee thereof."

Similar protection is granted to employees and officers of a statutory trust. Section 3806 of the same statute states that "except to the extent otherwise provided in the governing instrument of a statutory trust, the business and affairs of a statutory trust shall be managed by or under the direction of its trustees [and] a governing instrument may contain any provision relating to the management of the business and affairs of the statutory trust, and the rights, duties and obligations of the trustees, beneficial owners and other persons, which is not contrary to any provision or requirement of this subchapter...."

9 For a different evolutionary twist, see section 17-401 of the Delaware ULPA, which permits a general partner (even a sole general partner) that has no economic interest in the limited partnership.

For an excellent analysis of the evolution of LLPs, see Keatinge, Donn, Coleman, and Hester, "Limited Liability Partnerships: The Next Step in the Evolution of the Unincorporated Business Organization," 51 Business Lawyer 147 (November 1995).

10 The evolution of and changes in state unincorporated entity statutes contributed to Treasury's decision to replace the "four factors" partnership classification test in the old "Kintner Regulations" with the generally elective check-the-box approach of the current Regulations. See TD 8697, 12/17/96.

11 Staff of the Joint Committee on Taxation, Study of the Overall State of the Federal Tax System and Recommendations for Simplification, Pursuant to Section 8022(3)(B) of the Internal Revenue Code of 1986 (JCS-3-01, April 2001) (the "2001 JCT Report"), page 277. Also see id., page 280 ("... most State law with respect to limited partners [provides] that a [limited partner] is prohibited from, or limited in, participation in the management or business of the partnership").

The JCT Staff's statements in 2001 were erroneous in that ULPA (1976) with 1985 Amendments, section 303, introduced a wholly new concept that it is not sound public policy to hold a limited partner who is not also a general partner liable for the obligations of the partnership except with respect to persons who have done business with the limited partnership believing, based on the limited partner's conduct, that he is a general partner. ULPA (2001) goes even further, eliminating the so-called "control" rule with respect to a limited partner's personal liability for entity obligations "and bring[ing] limited partners into parity with LLC members, LLP partners and corporate shareholders." ULPA (2001), section 303—Comments (quoted in part 6 of Exhibit 2 in this article, "Limitations on Limited Partners' Activities").

12 Under the 1976 version, a "limited partner" would lose his limited liability protection if: "in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business. However, if the limited partner's participation in the control of the business is not substantially the same as the exercise of the powers of a general partner, he is liable only to persons who transact business with the limited partnership with actual knowledge of his participation in control." ULPA (1976), section 303(a), 6B U.L.A. 180 (2008). As to potential liability of limited partners under ULPA (1976) for their partnerships' obligations, see generally Banoff, "Can Tax Practitioners Support the Revised ULPA?," 60 Taxes 97 (February 1982) ("ULPA Support article").

13 Those provisions are analyzed in greater detail in the text, below.

14 See, e.g., Frost, "Square Peg, Meet Round Hole: Classifying LLC Members as General Partners or Limited Partners for Federal Tax Purposes," 73 Taxes 676 (December 1995) (the "Round Hole article"); Banoff, Frost, and Keatinge, "Defining 'General Partner' and 'Limited Partner' for Federal Tax Purposes," 96 TNT 37-82, 70 Tax Notes 1019 (2/19/96) (the "1996 Special Report"); Banoff, Frost, and Keatinge, "Determining Whether Members of LLCs Should Be Treated for Tax Purposes as General Partners or Limited Partners," LLC Advisor (June 1996), page 4; Banoff and Lipton, "Passive Losses, LLCs and LLPs—Two Courts Reject the Service's Attempt to Limit Losses," 111 JTAX 204 (October 2009).

15 The partner-characterization issues discussed in this article also arise at the state tax level, as many states "piggyback" on federal tax law. See, e.g., Shop Talk, "Partners and LLC Members for California Tax Purposes: The Confusion Continues," 114 JTAX 318 (May 2011) ; Shop Talk, "Are LLC Members GPs or LPs for State Tax Purposes? The Question Won't Go Away!", 104 JTAX 380 (June 2006) ; Shop Talk, "Are LLC Members GPs or LPs for Federal or State Tax Purposes?," 98 JTAX 62 (January 2003) ; and Shop Talk, "LLC Members—GPs or LPs for State Tax Purposes?," 88 JTAX 316 (May 1998).

16 See, e.g., Frost and Banoff, "Square Peg, Meet Black Hole: Uncertain Tax Consequences of Third Generation LLEs," 100 JTAX 326 (June 2004) (the "Black Hole article").

17 See, e.g., the Round Hole article, supra note 14, and the Black Hole article, supra note 16.

18 This was acknowledged by the Tax Court (two years before the decision in Renkemeyer, Campbell & Weaver, LLP, 136 TC 137 (2011)) in Garnett, 132 TC 368 (2009) ("The Code and regulations provide no general definition of 'limited partner'"). The Service also has acknowledged that neither the Code nor the Regulations define "limited partnership" or "limited partner," in TAM 9110003 (inapplicability of Section 1402(a)(13) to a putative limited partner).

19 Definitions in Section 7701 and the Regulations thereunder are applicable "when used in this title," i.e., for all purposes of the Code, except "where not otherwise distinctly expressed or manifestly incompatible with the intent thereof"; see Section 7701(a). The definitions of "partnership" and "partner" in Section 761 are solely for purposes of Subtitle A, the income tax rules, and thus technically are not applicable for estate and gift tax purposes (Subtitle B), employment taxes (Subtitle C), or other miscellaneous taxes or provisions (Subtitles D through J).

20 For a comprehensive (although now outdated) listing, see the 1996 Special Report, supra note 14.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.