IRS rules that a contractual arrangement can create a tax entity

US Outbound Newsalert

In Private Letter Ruling (PLR) 201305006, the IRS addresses for the first time following the introduction of the check-the-box regulations the federal tax classification of a contractual arrangement between a taxpayer and its affiliate. The PLR provides welcome guidance concerning the factors the IRS is likely to consider when classifying contractual arrangements for federal tax purposes in a check-the-box world. However, unanswered questions remain that are critical to understanding the proper scope of the PLR and that will continue to challenge practitioners.

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