MFA Comments on Eleven Step Allocation Process in 163(j) Proposed Rules
June 26, 2019
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.