The New Partnership Audit Procedures: Finding Our Way in the Dark

The Alabama Lawyer

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The Door in the Dark
In going from room to room in the dark
I reached out blindly to save my face
But neglected, however lightly, to lace
My fingers and close my arms in an arc.
A slim door got in past my guard,
And hit me a blow in the head so hard
I had my native simile jarred.
So people and things don’t pair any more
With what they used to pair with before.
–Robert Frost

Alabama lawyers who are trying to understand the new partnership audit procedures scheduled to be effective after 2017 should identify with Robert Frost. The statutes rushed into enactment late last year as part of the Bipartisan Budget Act of 20151 leave many questions unanswered, with several gaping holes to be filled with guidance from the Treasury Department and the IRS. And opportunities for confusion will multiply as Alabama and other states develop their own separate responses to the federal changes.2 The challenges posed for those of us drafting partnership agreements and related ownership transfer documents in the absence of guidance are a bit like trying to traverse a furniture-filled room in pitch darkness.

Republished with permission. This article originally appeared in the September 2016 issue of The Alabama Lawyer magazine.