Shearman & Sterling attorneys discussed a recent Tax Court decision in an article republished in the Summer 2023 issue of the Journal of Taxation of Investments entitled “Tax Court Agrees Profits Interest Safe Harbor Should Apply to Tiered Partnership Structure.”
The authors included Tax partners Todd Lowther, Larry Crouch and Ryan Bray, Compensation, Governance & ERISA partner Gillian Emmett Moldowan, Tax associate Ira Aghai, and Compensation, Governance & ERISA associate Jai Garg.
The article, originally published by Shearman & Sterling in May, explains that the court’s ruling that taxpayer’s receipt of a profits interest in a lower-tier partnership does qualify as a non-taxable event under the safe harbor provided in Revenue Procedure 93-27.
The attorneys explain how the court's decision provides guidance on the use of such structures while resolving certain unsettled tax issues. The decision is expected to be cited by practitioners to support the application of the profits interest safe harbor in similar situations involving tiered partnership structures.