MFA Comments on Eleven Step Allocation Process in 163(j) Proposed Rules

June 26, 2019

From: MFA

To:

Department of the Treasury

In the comment letter submitted on June 26, MFA raises concerns with the application of the eleven-step computation process for allocating excess taxable income (ETI) under the proposed rules, particularly with respect to partnerships that have special allocations or side-pocket arrangements.  The letter encourages Treasury and the IRS to amend the proposed rules to allow partnerships to allocate ETI to partners in a manner similar to the remedial method in Treas. Reg. § 1.704-3(d), to prevent the distortions caused by a partner receiving allocations of taxable income from a partnership in excess of its ETI.

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