Final Chance
 
Last day to take the Industry Pulse Check. Learn more
 

Treasury Announces Crackdown on Certain Partnership Transactions

Regulations
Published
Contact: J.P. Delmore
[email protected]
AVP, Government Affairs
(202) 266-8412

The Department of Treasury and Internal Revenue Service (IRS) announced a crackdown — and new disclosure requirements — on “basis shifting” transactions used by partnerships that share common ownership. The Biden administration estimates this move could generate an additional $50 billion in tax revenue over the next decade.

“Related-party basis shifting” is where multiple partnerships sharing a common ownership interest trade assets to maximize depreciation benefits, in some cases resulting in the same asset being depreciated repeatedly. 

In making this announcement, the IRS is claiming basis shifting is tax evasion. The foundation of this decision is an existing rule known as “economic substance,” where a transaction must have a purpose beyond tax avoidance. The interpretation that basis shifting is illegal is not without controversy, with some tax lawyers arguing basis shifting is permitted under the tax code and a legitimate tax planning tool. It is possible the IRS actions will be challenged in court.

The IRS plans to publish guidance for accountants and tax lawyers outlining what transactions the agency views as fraudulent, as well as the IRS’ intention to audit partnerships using basis shifting. As such, the IRS plans to propose new regulations to require large partnerships to provide more detail to the IRS about their use of basis shifting. 

NAHB recommends its members consult with their accountant or other tax professional for more information. 

NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Advocacy | Spring Leadership Meeting

Jun 12, 2026

Cabinet-Level Officials Discuss Regulatory Reform With NAHB Members

On June 11, Housing and Urban Development Secretary Scott Turner, Small Business Administration Administrator Kelly Loeffler, Federal Housing Finance Agency Director William Pulte and Environmental Protection Agency Administrator Lee Zeldin discussed housing, environmental and small business regulatory issues during NAHB’s Spring Leadership Meeting.

Economics

Jun 11, 2026

Fed Rate Hike Possible Amid Inflation and Geopolitical Uncertainty

The bond market is projecting that it is now more likely than not that the next monetary policy move by the central bank is a federal funds rate increase rather than a cut. NAHB Chief Economist Robert Dietz provides his insights and recaps key factors shaping the market.

View all

Latest Economic News

Economics

Jun 12, 2026

Single-Family Permits Continue to Decline Through April as Multifamily Activity Strengthens

Through April 2026, residential construction activity remained uneven across housing sectors. Single-family permitting continued to soften compared with a year ago, reflecting persistent affordability challenges and elevated borrowing costs, while multifamily permitting posted solid gains supported by stronger activity in several regions.

Economics

Jun 11, 2026

Residential Building Material Prices Rise at Highest Rate In Over Three Years

Wholesale prices of goods used in residential construction rose in May as energy prices continued to climb.

Economics

Jun 10, 2026

Inflation Surpassed 4% in May

Inflation accelerated to a new three-year high in May, driven by continued increases in energy costs from the Iran war. Energy costs drove more than 60% of the monthly increase, with national gasoline prices jumping more than a dollar since the war began.