Related Parties

About Related Parties:

Parties defined, for purposes of disallowing a loss on the sale or trade of property between related parties, as follows:

• family members (i.e., brothers, sisters, half-brothers, half-sisters, spouses, ancestors, and lineal descendants).

• a corporation in which the taxpayer directly or indirectly owns more than 50% of the value of the outstanding stock.

• a tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or method, by the taxpayer or any member of his or her family.

• the grantor and fiduciary, or the fiduciary and beneficiary, of any trust.

• fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, with the same grantor.

• a trust fiduciary and a corporation of which more than 50% of the value of the outstanding stock is owned by or for the trust or grantor.

• a corporation and a partnership if the same persons own more than 50% of each.

• two S corporations if the same persons own more than 5% of each.

• two corporations that are members of the same controlled group (losses may be deferred rather than disallowed).

• two partnerships if the same persons own more than 50% of each.

• a partnership and a person who owns more than 50% of the capital or profits interest. Former IRC (check if this IRC provision is current here) §267.

About Related Parties.:

Nonrecourse loans from related parties qualify as amounts at risk only if the terms are “commercially reasonable” and are on substantially the same terms as loans involving unrelated persons. Former IRC (check if this IRC provision is current here) §267.