PARTNERSHIPS Act

The PARTNERSHIPS Act (S 2095) makes significant changes to partnership taxation under the Internal Revenue Code, primarily affecting partnerships where two or more members of a controlled group own 50% or more of capital or profits interests. The bill establishes a "consistent percentage method" for allocating income, gains, losses, and deductions among partners in these covered partnerships, requiring new reporting rules for such entities. It also modifies how partnership debt is allocated, adjusts basis for partnership property, and extends the net investment income tax to certain high-income individuals' trade or business income. These changes aim to prevent tax avoidance and clarify partnership tax treatment while creating new administrative requirements for affected businesses.