Typically, publicly traded entities must be treated as corporations for tax purposes. Blackstone Group LP is publicly traded, yet it is not treated as a corporation for tax purposes. Why not? Blackstone Group LP utilizes complex tax structuring in order to qualify for an exception from the typical corporate tax treatment and, in the process, saves millions of dollars in tax liability annually. Members of Congress have proposed reforms that would have prevented Blackstone Group LP from reducing its tax liability in this manner. However, these reforms were not enacted This Article takes a different approach. It argues that existing law already provides the IRS with the tools needed to challenge the legitimacy of the results claimed by Blackstone Group LP. In the process, this Article highlights an important and unintended loophole in existing partnership tax allocation rules — specifically, the failure of the rules to adequately address allocations among related partners. Finally, this Article proposes that the IRS use general tax law standards to close this unintended loophole
