The Internal Revenue Code IRS 267 defines related party as:
- members of a family (spouse, brother, sister, ancestor, or lineal descendant);
- a corporation and an individual shareholder who directly or indirectly owns more than 50% in value of the outstanding stock;
- two corporations that are members of the same controlled group;
- a grantor and a fiduciary of the same trust;
- a fiduciary and a beneficiary of the same trust;
- fiduciaries of trusts with the same grantor;
- a fiduciary of a trust and a corporation if more than 50% in value of the outstanding stock is owned directly or indirectly by the trust or its grantor;
- a tax-exempt organization, such as an educational or charitable organization, and a person that controls it directly or indirectly (including control by an individual’s family members);
- a corporation and a partnership if the same persons own more than 50% in value of the corporation’s outstanding stock, and more than 50% of the partnership’s capital or profits interest;
- two S corporations if the same persons own more than 50% in value of the outstanding stock of each;
- an S corporation and a C corporation, if the same persons own more than 50% in value of the outstanding stock of each;
- an executor and a beneficiary of the same estate, except when the sale or exchange satisfies a pecuniary request;
- certain partnerships with common partners; and
- for purposes of the matching rule only, a personal service corporation and any employee-owner.
Transfers of LP Interests may have legal and tax implications. If you have any questions regarding the consequences of such a transfer, we encourage you to consult with your legal and tax advisor.