Monday, March 26, 2007
Bradley T. Borden (Washburn) has posted Policy and Theoretical Dimensions of Qualified Tax Partnerships on SSRN. Here is the abstract:
Qualified tax partnerships are arrangements that come within the definition of tax partnership but elect out of the subchapter K partnership tax rules. Tax entity classification discussions often overlook qualified tax partnerships. This Article identifies them as a definite part of the tax entity classification spectrum (along with disregarded arrangements, tax partnerships, S corporations, and C corporations). The Article presents a theoretical model that describes the relationship qualified tax partnerships have with other tax arrangements. By illustrating that relationship, the Article dismisses misconceptions about qualified tax partnerships. The Article also demonstrates that tax policy does not support the current definitional construct of qualified tax partnerships. A better classification model would provide for a narrower definition of tax partnership and eliminate qualified tax partnerships. Lawmakers, however, may never construct that better model. If they do not, qualified tax partnerships will continue to play an important role in the U.S. tax system. That being the case, Treasury should expand the regulatory definition of qualified tax partnership. Finally, the Article posits that policy and theory suggest that tax laws should apply to qualified tax partnerships in very limited circumstances.