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Tax Treatment of Partnership Mergers: "Assets-Up" vs. "Assets-Over," Ensuring Tax Deferral and Continuation of Entity

Note: CLE credit is not offered on this program

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

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Conducted on Wednesday, January 30, 2019

Recorded event now available

This course will provide tax advisers with a practical guide to the tax treatment of partnership mergers. The panel will discuss the impact of various merging structures on individual partners and detail the specific tax and operation structures of "assets-over" vs. "assets-up" merger transactions.

Description

The proper tax treatment of partnership mergers often presents significant complexities to tax advisers serving partnerships and their shareholders. Just determining whether a merger has even occurred for tax purposes can challenge experienced tax professionals because varying state statutes govern what constitutes a merger and the absence of a firm definition in the Internal Revenue Code as to what types of transactions qualify as partnership mergers.

Section 708 regulates the tax treatment of partnership mergers and provides that a merged partnership is a continuation of one of the partnerships. A partnership merger occurs in transactions where two or more partnerships combine and no more than one partnership emerges. The regulations under Section 708 provide rules for determining the form of partnership mergers and whether any of the pre-merger partnerships continue following the merger and the tax consequences of continuing and terminating partnerships.

Listen as our experienced panel provides an in-depth and practical guide to the tax treatment of partnership merger transactions.

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Outline

  1. Structures of mergers and conversions: state rules vs. tax rules
  2. Partnership merger and division rules vs. corporate rules
  3. Section 708 "continuing interest" provisions
  4. Determination of which partnership is the "continuing" entity in a merger transaction
  5. Various structures and tax impact on partnerships and remaining and departing partners
    1. "Assets-over" structures
    2. "Assets-up" structures
  6. Risks inherent in partnership mergers
    1. Risk of disguised sale treatment
    2. Anti-mixing bowl considerations
    3. Treatment of boot received in a merger

Benefits

The panel will discuss these and other relevant topics:

  • Determining which partnership is considered the continuing entity
  • Distinguishing "assets-over” vs. "assets-up" transaction structures
  • Anticipating the risks of 721 contributions of interest transactions
  • Avoiding "mixing bowl" traps in connection with a partnership merger
  • Treatment of boot received in a merger

Faculty

Borden, Bradley
Professor Bradley T. (Brad) Borden
Professor of Law
Brooklyn Law School

Professor Borden’s research, scholarship, and teaching focus on taxation of real property transactions 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