Proposed IRS Regulations Target Management Fee Waivers in Exchange for Partnership Interests

Simon Riveles IRS

By Lauren Mack On July 22, 2015, the IRS issued a notice of proposed rulemaking regarding the classification of management fee waivers in exchange for partnership interests as disguised payment for services. Under the proposed regulations, allocations of income to partners that provide services to the partnership that lack “significant entrepreneurial risk” will be recharacterized by the IRS as payments for services. Background In 1984, …