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Section 743(b) Adjustments in Multi-Tier Partnerships: Applying Rev. Rul. 87-115 to Upper- and Lower-Tier Entities

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Friday, September 20, 2024

Recorded event now available

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This course will provide tax advisers and compliance professionals with an advanced and practical guide to the reporting complexities and planning opportunities present in making Section 743(b) adjustments in the context of multi-tiered partnerships. The panel will outline the provisions of Rev. Rul. 87-115 governing when an upper-tier partnership may push 743(b) adjustments down to lower-tier partnership's assets, discuss planning opportunities under various scenarios, and detail the Section 755 adjustments required when making 743(b) adjustments in lower-tier partnerships.

Description

From both planning and compliance aspects, a partnership's distribution of a partnership interest under Sec. 743(b) can be one of the most challenging issues facing partnership tax advisers. Calculations that are complex when applied to single-layer partnerships become even more complicated when applied to a multi-tier partnership structure. Advisers serving multi-tier partnership clients must know not only the 743(b) rules but also how to apply those rules in the context of a tiered partnership structure.

Treasury has issued rulings on when basis adjustments under 743(b) are mandatory, optional, or impermissible without additional action. Rev. Rul. 87-115 details adjustments that must be made in the context of the sale of an interest in an upper-tier partnership, depending on which partnership tier has an active Section 754 election in place.

Prior to any sale transaction, the partnership's tax advisers should have a thorough understanding of when each tier of the partnership may make a basis adjustment, as well as the steps to take if a 743(b) adjustment is appropriate but unavailable. Advisers must be able to determine whether 743(b) adjustment is advantageous to each partnership tier.

Listen as our panel of veteran advisers provides practical guidance in the form of a detailed case study on the ins and outs of Section 743(b) adjustments and allocations, leaving you prepared to advise on the planning and compliance tasks of this complex area of partnership taxation.

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Outline

  1. Section 754 election and interaction between Sections 754-755
  2. Transactions giving rise to adjustments under Sect. 743(b)
  3. 743(b) basis adjustment rules for multi-tier structures under Rev. Rul. 87-115
    1. When both UTP and all LTPs have a valid Section 754 election in place
    2. When only the UTP has made a valid Section 754 election
    3. When only the LTP has made a valid Section 754 election
  4. Coordinating tax reporting between UTP and LTPs
  5. Segregating individual transactions subject to Section 743(b) allocations
  6. Planning opportunities under various scenarios

Benefits

The panel will review these and other key issues:

  • Mechanics of applying 743(b) basis adjustments with various combinations of partnership tiers having Section 754 elections in place
  • Allocation of basis adjustments to upper- and lower-tier partnerships
  • Reporting requirements and challenges in preparing the Form 1065 return for the upper-tier partnership
  • Planning opportunities under various scenarios addressed in Rev. Rul. 87-115

Faculty

Surkin, Dean
Dean L. Surkin, JD, LLM
Professor (Adjunct)
Pace University Graduate School of Business

Mr. Surkin is an attorney engaged in private practice in the New York metropolitan area. He recently retired from the...  |  Read More

Yeates, Tanner
Tanner Yeates

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