IRC Section 707 Transactions Between Partnerships and Their Members

Navigating Disguised Sales Provisions and Avoiding Other Pitfalls Under Anti-Abuse Rules

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


Conducted on Tuesday, March 6, 2012

Recorded event now available

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Program Materials

This teleconference will provide tax counsel with a guide to the impact of IRC Section 707 on business transactions between partnerships and partners. The panel will explore the analyses used by the IRS and courts to deem business deals as disguised sales and abusive situations triggering taxable events.

Description

IRC Section 707 focuses on partnership transactions in which a member-partner performs services, transfers property, engages in sales or exchanges of property, or receives guaranteed payments for use of capital.

Advisers must analyze transactions to determine which events are taxable by examining whether the partner is acting outside the role as partner. This analysis is complicated by disguised sales rules, and the evolving interpretations by the IRS and courts of the circumstances that warrant federal taxation.

Practitioners face the challenge of interpreting Section 707 and providing clients with advice in an area rife with ambiguity to those unaware of material terms and interpretations.

Listen as our authoritative panel explains the key points of Section 707 and explores the circumstances deemed by the IRS and courts as disguised sales and abusive situations triggering taxable events.

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Outline

  1. Analysis of IRC Section 707
    1. Section 707(a)(2): partner vs non-partner capacity
    2. Section 707(a)(2)(A): partner performance of services
    3. Section 707(a)(2)(B): partner transfers of property
    4. Section 707(b)(1): disallowance of losses
    5. Section 707(b)(2): treatment of gains as ordinary income
    6. Section 707(b)(3): ownership of a capital or profits interest
    7. Section 707(b)(3)(c): guaranteed payments
  2. Administrative Guidance and Decisions Involving Section 707
    1. Canal Corp. v. Commissioner, U.S. Tax Court
    2. IRS Anti-Abuse Regulations
    3. II(c) Virginia Historic Tax Credit Fund 2001 LP vs. Commissioner, 4th Circuit
  3. Section 707 Planning Issues
    1. Business structures under audit
    2. Transactions that are likely to be problematic or permissible for tax purposes

Benefits

The panel will review these and other key questions:

  • How do the provisions of Section 707 distinguish between partnership-partner transactions that are taxable events and those that are not?
  • What kinds of transactions are the most likely to trigger disguised sale and anti-abuse rules, resulting in taxable events?
  • What business structures are the IRS scrutinizing in connection with Section 707?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Immerman, Andrew
L. Andrew Immerman

Partner
Alston & Bird

Mr. Immerman concentrates on federal income tax matters, including domestic and international tax planning and...  |  Read More

Patricia McDonald
Patricia McDonald

Partner
Baker & McKenzie

She works on tax issues for corporations and partnerships, LLCs and other pass-through entities. She speaks frequently...  |  Read More

Keith Wood
Keith Wood

Director
Carruthers & Roth

He works with business clients on a wide range of tax and succession planning, compensation and management structure...  |  Read More

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