To amend the Internal Revenue Code of 1986 to improve the rules related to partners and partnerships, and for other purposes.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
The bill defines reference, etc This Act may be cited as the Preventing Abusive Routine Tax Nonsense Enabled by Rip-offs Shelters and Havens and Instead Promoting Simplicity Act or the PARTNERSHIPS Act, requires covered partnerships (controlled by related party groups owning 50%+ of capital or profits) to use consistent percentage method for allocating income, gain, loss, deduction, and credits among covered partners, and mandates the use of the remedial method for allocating built-in gains and losses on property contributed to partnerships, eliminating flexibility in choosing allocation methods. It relies on compliance mandates, tax rate changes, definition changes, and exemptions. The main policy areas are Finance, Taxation, and Trade.
Who Benefits and How
Federal government could gain revenue opportunities, Small partnerships meeting gross receipts test could face lower compliance burdens, and Qualified small business partnerships could face lower compliance burdens.
Who Bears the Burden and How
Large partnerships above gross receipts threshold would take on compliance duties, Wealthy investors using swap funds to defer capital gains could face higher costs, and Tax shelter promoters and abusive partnership structures could face higher barriers.
Key Provisions
- Defines reference, etc This Act may be cited as the Preventing Abusive Routine Tax Nonsense Enabled by Rip-offs Shelters and Havens and Instead Promoting Simplicity Act or the PARTNERSHIPS Act.
- Requires covered partnerships (controlled by related party groups owning 50%+ of capital or profits) to use consistent percentage method for allocating income, gain, loss, deduction, and credits among covered partners...
- Mandates the use of the remedial method for allocating built-in gains and losses on property contributed to partnerships, eliminating flexibility in choosing allocation methods.
- Requires applies built-in gain/loss allocation rules to partnership property at revaluation events (disproportionate contributions, distributions, service grants, option issuances, or profit-sharing changes).
- Creates eliminates the 7-year safe harbor for recognizing built-in gain on property contributed to partnerships, making precontribution gain subject to taxation indefinitely.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill defines reference, etc This Act may be cited as the Preventing Abusive Routine Tax Nonsense Enabled by Rip-offs Shelters and Havens and Instead Promoting Simplicity Act or the PARTNERSHIPS Act, requires covered partnerships (controlled by related party groups owning 50%+ of capital or profits) to use consistent percentage method for allocating income, gain, loss, deduction, and credits among covered partners, and mandates the use of the remedial method for allocating built-in gains and losses on property contributed to partnerships, eliminating flexibility in choosing allocation methods.
Key Policy Areas
Finance, Taxation, Trade
Primary Purpose
The bill defines reference, etc This Act may be cited as the Preventing Abusive Routine Tax Nonsense Enabled by Rip-offs Shelters and Havens and Instead Promoting Simplicity Act or the PARTNERSHIPS Act, requires covered partnerships (controlled by related party groups owning 50%+ of capital or profits) to use consistent percentage method for allocating income, gain, loss, deduction, and credits among covered partners, and mandates the use of the remedial method for allocating built-in gains and losses on property contributed to partnerships, eliminating flexibility in choosing allocation methods.
Policy Domains
PARTNERSHIPS Act - Full Bill
Identified Gains
- Federal government
- Small partnerships meeting gross receipts test
- Qualified small business partnerships
- Partners with worthless partnership interests
- IRS enforcement
Identified Costs
- Large partnerships above gross receipts threshold
- Wealthy investors using swap funds to defer capital gains
- Tax shelter promoters and abusive partnership structures
- Partners contributing appreciated assets to partnerships
- Limited partners using debt allocation for basis
Sponsors
Legislative Progress
IntroducedMr. Wyden introduced the following bill; which was read twice …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Investors in failed partnerships, Large partnership structures controlled by related parties, Large partnerships above gross receipts threshold
Positive-direction: Investors in failed partnerships, Partners with worthless partnership interests
Negative-direction: Large partnership structures controlled by related parties, Large partnerships above gross receipts threshold, Limited partners using debt allocation for basis, Partners contributing appreciated assets to partnerships, Partnerships receiving appreciated property contributions, Partnerships using aggressive tax positions, Partnerships using related-party structures, Private equity and hedge fund partnerships, Private equity funds with leveraged structures
Partners in profitable partnerships, Retiring partners in service partnerships, Service partnerships (law firms, accounting firms)
Positive-direction: Tax advisors specializing in partnership taxation
Negative-direction: Partners in profitable partnerships, Retiring partners in service partnerships, Service partnerships (law firms, accounting firms), Successors of deceased partners, Tax shelter promoters and abusive partnership structures
Federal government, IRS enforcement, Treasury Department and IRS
Family-owned partnerships, Qualified small business partnerships, S corporation shareholders with high income
Positive-direction: Qualified small business partnerships, Small partnerships meeting gross receipts test
Negative-direction: Family-owned partnerships, S corporation shareholders with high income
Partners contributing appreciated property, Real estate investors using partnership structures, Real estate partnerships with significant debt
High-income individuals earning over ,000, Wealthy investors using swap funds to defer capital gains
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury
Key Definitions
Terms defined in this bill
A partnership where two or more members of a controlled group own 50 percent or more of capital or profits
A partner that is a member of a controlled group owning the covered partnership
Method where each covered partners share of applicable items bears the same ratio based on net equity
Disproportionate contribution or distribution of property, grant of partnership interest for services
A partnership meeting the gross receipts test under section 448(c) that is not a tax shelter
USD 400,000 for individuals (USD 500,000 for joint filers)
Net investment income calculated without the trade or business exception
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology