Recent Developments Observations: New Loss Limitation and Taxation of Foreign-Held Partnerships Raise Many Questions

Many provisions of P.L. 115-97 (commonly referred to as the "Tax Cuts and Jobs Act") raise many questions. The new limitations on certain losses and new taxation of foreign-held partnership interests are no different. This column explores these new provisions and raises some of these questions. This column is not intended to be a comprehensive dive into either of these new provisions but will help with understanding them and will raise some of the difficult questions that arise under these new provisions. The first portion of this column addresses changes in the limitations on the use of business losses. The new limitations are in addition to the passive activity loss limitations, at-risk limitations and basis limitations. Under previous law, Code Sec. 461(j) limited the use of an excess farm loss incurred by a non-corporate taxpayer that receives an applicable subsidy.