Equity Compensation Grants in Partnerships and LLCs: Overcoming Tax Challenges and Key Planning Techniques for Counsel

Impact of Tax Reform, Profits vs. Capital Interests, Section 83, Options and Phantom Equity, Carried Interest, and More

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

Conducted on Thursday, January 3, 2019

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel and advisers with a detailed analysis of the tax implications associated with equity compensation grants in partnerships and LLCs. The panel will discuss profit versus capital interests, phantom equity, the application of Section 83, carried interest, the impact of tax reform, and best tax planning methods for compensatory interests and other arrangements.


There are several issues faced by partnerships and LLCs when handling equity compensation matters. These issues are unique to partnership and LLC equity compensation due to the differences in the tax regime applied to entities taxed as partnerships compared to those taxed as corporations. Tax counsel and advisers must have thorough knowledge of the forms that equity compensation can take and applicable tax rules to avoid any unintended tax consequences.

Partnership and LLC equity compensation can take several forms, including granting profits interests, capital interests, and options to acquire such interests. Each of these arrangements has specific economic and tax implications, including whether the grantee should be treated as an employee or a partner for tax purposes.

Also, tax counsel and advisers face additional challenges including the application of Section 83, significant changes to carried interest taxation under tax reform, the treatment of fee waivers, and lack of definitive IRS guidance. These and other issues present planning and compliance challenges that must be carefully considered.

Listen as our experienced panel offers a thorough and practical guide to planning considerations in partnership and LLC grants of equity compensation, phantom equity, the application of Section 83, and the impact of new carried interest rules.



  1. Types of equity compensation and alternatives for partnerships and LLCs
  2. Planning considerations post-tax-reform
  3. The impact of new rules on carried interest
  4. Reporting and compliance challenges for partners/members
  5. Best practices in structuring equity compensation arrangements to avoid unfavorable tax treatment


The panel will review these and other key issues:

  • Capital interest versus profits interest as equity compensation in partnerships and LLCs
  • Different planning methods based on the type of equity compensation
  • Application Section 83 and unvested interests
  • Section 409A and compensatory grants of equity interests in partnerships and LLCs
  • Tax treatment of carried interest and fee waivers arising from compensatory grants of equity interests
  • Best practices and critical considerations for equity compensation grants in partnerships and LLCs post-tax reform


Wagner, Scott
Scott V. Wagner

Morris Manning & Martin

Mr. Wagner focuses his practice on counseling clients on matters relating to the design, drafting, and administration...  |  Read More

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