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When I asked why I had been chosen for the extra attention, two more agents quickly appeared and their unsmiling faces emphasized that airport security was, indeed, very serious business. "We need to be sure you don't have anything you can use to take control of an aircraft", the screener told me. I will never forget the absurdity of his words.

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October 30, 1995

In 1982 Congress passed a law providing that the tax treatment of partnership items would be determined at the partnership level rather than the partner level. Under this procedure, a tax matters partner is designated by a partnership to represent the partnership before the Internal Revenue Service (IRS) in all tax matters for a specific taxable year.

Under the law, a partnership may only designate a general partner as its tax matters partner. If no general partner is designated, the tax matters partner is the general partner having the largest profits interest in the partnership at the close of the taxable year involved (largest-profits-interest rule). The law also provides that, if no general partner is designated and the Commissioner determines that it is impracticable to apply the largest-profits-interest rule, the partner selected by the Commissioner is treated as the tax matters partner.

Since 1982, virtually all states and several foreign jurisdictions have enacted laws providing for the formation of limited liability companies (LLCs). LLCs in most jurisdictions may be classified for Federal tax purposes either as partnerships or associations that are taxable as corporations, depending on the characteristics of the LLC. For an LLC classified as a partnership for Federal tax purposes, an important issue is determining who is the LLC's tax matters partner.

The proposed regulations state which members of an LLC classified as a partnership for Federal tax purposes may be designated as the LLC's tax matters partner. For administrative simplicity, the proposed regulations also consolidate all the published guidance on tax matters partner.

The full text of the proposed regulations and information about submitting comments on the regulations appears in the Federal Register dated October 30, 1995.

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