October 19, 2021

Volume XI, Number 292

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October 18, 2021

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Year Long Pause Lifted on MLP Qualifying Income Private Letter Rulings – Proposed Regulations to be Issued

Following a year long pause, the IRS announced Friday that it has resumed its review of pending private letter ruling (PLR) requests and is accepting new PLR requests concerning MLP qualifying income under Section 7704(d)(1)(E) of the Internal Revenue Code. During the qualifying income ruling pause, which began in March 2014, the IRS postponed consideration of taxpayer requests for qualifying income PLRs in order to study issues related to qualifying income and to consider broader interpretive guidance to the MLP industry.

In addition, according to statements made by an IRS official, the Treasury Department will issue proposed regulations in the near future that address qualifying income. The issuance of proposed regulations will be a significant development in this area, as PLRs historically have been the primary source of interpretive guidance on the scope of activities generating qualifying income. Although no details on the substance of the proposed regulations were given, the IRS indicated that the proposed regulations will address qualifying income related to midstream, upstream and downstream activities, as well as oilfield services activities. In addition, it is our understanding that generous transitional rules will be provided for MLPs and other taxpayers that previously received PLRs that may be inconsistent with the proposed regulations once they are finalized.

© 2021 Bracewell LLPNational Law Review, Volume V, Number 68
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About this Author

Gregory M. Bopp, Business, Tax Attorney, Bracewell law firm
Partner

Greg Bopp serves as co-chair of the firm's Business and Regulatory Section and is a member of the firm's Management Committee. Mr. Bopp has experience in tax and corporate matters related to mergers and acquisitions, joint ventures and capital markets transactions. His clients include master limited partnerships (MLPs), foreign and domestic public corporations, investment banks and private investment funds.

A significant part of Mr. Bopp's practice involves midstream and upstream energy transactions, including structuring and negotiating complex...

713-221-1511
Elizabeth McGinley, Energy, Tax, Attorney, Bracewell law firm
Partner

Elizabeth McGinley is the head of the firm's tax practice. She represents a variety of clients in the oil and gas and electric power industries, including private equity firms investing in oil and gas exploration, production and infrastructure. Her experience includes complex debt and equity financing, joint ventures and project finance, as well as experience with volumetric production payment (VPP) transactions. 

In addition, Elizabeth has experience in partnership and corporate transactions including mergers and acquisitions and spin-off...

212-508-6173
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