Related Party Transactions

Related party rules are factors that often affect characteristics of income and deductions like the timing or character, and may even prevent losses and deductions completely. This class will provide a basic overview of the assortment of Internal Revenue Code provisions that make up related parties and rules applicable to these issues. Over the years Congress has instituted various measures to safeguard from related party manipulations. The effect of ascertaining certain taxpayers as “related” may cause a transaction to achieve federal income tax consequences substantially different than a transaction accomplished by parties that are not related. Because the core definition of “related parties,” as found in IRC §267, is frequently cross-referenced by other sections throughout the Internal Revenue Code, an analysis of this definition is paramount in determining the impact of other sections, as well.