As a reminder, for applicable transfers, copies of Form 8308, “Report of a Sale or Exchange of Certain Partnership Interests,” must be provided to the transferor and transferee by January 31, 2025, for any transfers made in 2024. Additionally, the form must be attached to the partnership’s annual tax return (Form 1065) due by March 15, 2025.
Form 8308 is required when a partner sells or exchanges all or part of their partnership interest, and any portion of the proceeds is attributable to “hot assets,” such as unrealized receivables or inventory items. These gains may be treated as ordinary income. Unrealized receivables include accounts receivable of a cash basis taxpayer and Section 1245 or 1250 recapture items. If you’re unsure whether this applies to your transaction, please consult your WilkinGuttenplan tax advisor.
The IRS recently updated Form 8308, introducing a new Part IV in 2023, applicable to 2024 transactions, to report details regarding the gain or loss of the transaction. For taxpayers unable to complete Part IV by the January 31st deadline, the IRS offers penalty relief if Parts I through III are fully completed and furnished to the transferor and transferee by January 31, 2025. The completed Form 8308, including Part IV, must then be attached to the partnership’s tax return by March 15, 2025, to qualify for relief. To ensure you are in compliance and filing timely, please reach out to WilkinGuttenplan tax advisors today.
