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Tax Complexities in the Sale of Partnerships and LLCs

Navigating Character and Holding Period of Gain/Loss, Basis, Varying Interest Rule, Installment Sales, Capital Accounts

Note: CLE credit is not offered on this program

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

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This program is included with the Strafford CPE+ Pass. Click for more information.
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Conducted on Wednesday, August 7, 2024

Recorded event now available

or call 1-800-926-7926

This course will provide accounting and tax professionals with a review of tax considerations involved with purchasing and selling a partnership or LLC interest. The panel will address the allocation of income gains and losses and discuss tax implications on both the buy and sell sides.

Description

Tax treatment of sales of interests in LLCs and partnerships is complicated and confusing for the unprepared. Our panel of veteran tax advisers will offer their experiences and best practices for tax accountants to avoid the most costly mistakes.

Advisers who grasp only the top-level tax consequences for the seller of a partnership interest are not adequately prepared. Even experienced tax advisers can falter with concepts like tax basis, holding periods, and character of gain or loss--some of the complex characteristics determined by different IRS rules.

Our panel will identify opportunities to minimize tax consequences in the disposition of an LLC or partnership interest. Selling an interest often requires considering profits or capital interests and whether an interest is subject to vesting.

Listen as our panel examines the complex tax rules for transferring LLC and partnership interests, discusses the allocation of income gains and losses, and offers best practices for structuring transactions to obtain desired tax outcomes for the buyer and seller.

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Outline

  1. Tax rules related to sales or transfers of LLCs or partnership interests
    1. General rule
    2. Section 751 "hot asset" rules
    3. Purchaser issues
    4. Liquidating distributions (redemptions of partnership interest)
    5. New state pass-through entity taxation considerations
  2. Special situations
    1. Mergers and consolidations
    2. Disguised sales of partnership interests
    3. Debt-for-equity exchanges and transfers
    4. IRC Section 1446(f) withholding on sales by foreign partners
  3. Tax issues: basis adjustment rules
    1. Section 754 election due to transfer or distribution
    2. Section 743(b) adjustments
    3. Section 734 (b) adjustments

Benefits

The panel will review these and other key points:

  • Tax differences that result from choosing between the sale or redemption of a departing partner's interest
  • Whether a sale or redemption of other partners will create a taxable event for the remaining owners
  • How to determine the character of gain or loss upon a transfer
  • Holding period and basis rules for transfers of partial interests
  • Planning techniques to navigate self-employment taxes

Faculty

Fowler, Lynn
Lynn E. Fowler
Partner
Kilpatrick Townsend & Stockton

Mr. Fowler focuses his practice on corporate and business tax law. He specializes in helping clients develop and...  |  Read More

Mandarino, Joseph
Joseph C. Mandarino
Partner
Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

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CPE On-Demand

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