Nathan and Matt dive into one of the most anxiety-inducing topics in real estate tax: IRS audits—specifically what a partnership audit actually looks like and how it differs from individual audits.
They break down why partnership audits are far less common than most operators assume, how the current partnership audit regime works, and what really triggers IRS scrutiny. The conversation focuses on practical risk analysis, not fear-based hypotheticals, with real-world examples from years of working with partnerships and investors.
Nathan and Matt cover:
The most common IRS notices partnerships and individuals actually receive
Why partnerships historically haven’t been audited often—and what changed under the BBA regime
How partnership audits work today and when tax can be assessed at the entity level
The role of IRS divisions, experience gaps, and ROI in audit selection
Why low audit risk does not justify indefensible tax positions
How to think about tax strategies through a risk-and-reward lens
Real examples of aggressive strategies gone wrong, including conservation easements
They wrap with a clear takeaway: audit risk should never drive tax decisions. Good tax planning assumes scrutiny, weighs risk intentionally, and focuses on positions that can be defended—not just benefits that look good on paper.
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The Major League Real Estate podcast is for general information purposes only and is not intended to provide, and should not be relied on for, tax, legal, investing, financial, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction.
