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ELIMINATION OF TERMINATION EXEMPTION FOR DISTRICT OF COLUMBIA UNINCORPORATED BUSINESS FRANCHISE TAX
Under District of Columbia Code, resident or nonresident limited liability companies and general and limited partnerships (as “unincorporated businesses”) that own real property in the District of Columbia are subject to the District’s 8.25% unincorporated business franchise tax on net income. Prior to January 1, 2021, there was a regulatory exemption to the imposition of the unincorporated business franchise tax on an unincorporated business with respect to any gain (other than ordinary gain resulting from the recapture of depreciation) from the sale or other disposition of assets, including real property, that resulted in the “termination” of the unincorporated business (for example, a sale of all of the entity’s real property and a termination of the unincorporated business as a result thereof). Instead, tax on the gain was imposed by the District of Columbia on the own