Amending LLC and Partnership Agreements to Address Tax Reform and the New IRS Audit Rules

Qualified Business Income Deduction, Former Partner Contributions to Tax Liability, Push-Out Elections and More

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, May 16, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will guide company counsel on how significant recent tax law developments—the 2017 Tax Act and the new partnership audit regime—affect partnerships, LLCs, and the agreements that govern them. The panel will discuss the amendments to partnership and LLC operating agreements that should be adopted, or at least considered, now.

Description

Most provisions of the 2017 Tax Act, and the earlier-enacted centralized partnership audit regime, took effect on January 1, 2018. These changes significantly impact partnerships and LLCs and thus demand a thorough understanding by counsel advising partnerships and LLCs as well as careful thought in drafting or modifying partnership and LLC operating agreements.

Several aspects of the 2017 Tax Act have substantial implications for businesses operating in partnership or LLC form. The 2017 Tax Act provides for a deduction at the partner level of up to 20% of qualified business income. Other aspects of the new law, such as temporary 100% expensing and the limitation on the deduction of net business interest expense, may also materially affect a partnership or LLC’s tax position.

The new partnership audit regime likewise represents a meaningful change for partnerships and LLCs. It provides for the collection of deficiencies at the partnership level. The IRS will no longer assess each partner’s share of any tax due as a result of a partnership audit. Instead, the partnership or LLC is liable for any imputed underpayment based on adjustments made in the partnership audit. These new rules, together with the proposed implementing regulations, may operate to materially distort partnership economics.

Counsel must understand both sets of new rules—the 2017 Tax Act and the new partnership audit regime—in order to assist partnerships and LLCs in maximizing their potential benefits, and minimizing their potential detriments, under the new laws, including essential amendments to partnership and LLC operating agreements.

Listen as our panel explain the most important features of the 2017 Tax Act for operating and investment partnerships, outline the new partnership audit regime and related regulatory developments, special rules applicable to partnerships with foreign partners or activities and essential amendments to be made in partnership and LLC operating agreements.

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Outline

I. The 2017 Tax Reform Act – Key Provisions for Partnerships and LLCs

II. The new partnership audit regime – Overview and Recent Developments

III. Advising Partnerships and LLCs on the 2018 Tax Landscape

IV. Drafting and Amending Partnership and LLC Operating Agreements – New Considerations

Benefits

The panel will review these and other critical issues:

  • What provisions of the new tax law affect existing partnership and LLC operating agreements?
  • The qualified business tax deduction and addressing distribution in agreements
  • The new IRS partnership audit rules and drafting or amending partnership and LLC operating agreements
  • What are the top priority issues regarding a former partner’s tax liability?

Faculty

Brenner, Jonathan
Jonathan S. Brenner

Member
Caplin & Drysdale

With over 30 years of experience as a tax attorney and business adviser, Mr. Brenner counsels businesses and...  |  Read More

Stevens, Elizabeth
Elizabeth J. Stevens

Atty
Caplin & Drysdale

Ms. Stevens' practice centers on international tax planning and advocacy for corporate clients. Matters involve...  |  Read More

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