IRS Partnership Audit Rules for Private Equity and Hedge Funds

Partnership Level Tax, Push-Out Elections, Partnership Representative Provisions, and More

Note: CPE credit is not offered on this program

A live 90-minute premium CLE video webinar with interactive Q&A


Tuesday, January 18, 2022

1:00pm-2:30pm EST, 10:00am-11:30am PST

Early Registration Discount Deadline, Friday, December 17, 2021

or call 1-800-926-7926

This CLE course will examine the IRS partnership audit rules and their impact on private equity and investment funds. The panel will discuss the provisions for partnership and LLC agreements in contemplation of the new rules, the elections available to smaller partnerships to avoid the partnership level audits, and "push-out" elections that allow for changes in ownership.

Description

For partnerships, including LLCs taxed as partnerships, the audit rules introduced under the Bipartisan Budget Act of 2015 were a game-changer. Commencing in 2018, the rules have impacted most partnerships, regardless of size. The IRS now assesses and collects taxes at the partnership level as opposed to the individual partner level. Any adjustments to the partnership's income, gains, losses, or deductions will be assessed in the year in which a tax audit occurs.

For private equity and hedge funds--where ownership changes may occur due to redemptions, investor defaults, or other events--the assessment of a partnership-level tax in the year in which an audit concludes may subject current partners to tax liability for periods they may not have been partners or held a different ownership percentage.

PE funds can make a "push-out" election within 45 days of a final adjustment but may need to amend their partnership agreements to address these contingencies.

PE funds must select a partnership representative with broad authority to bind the partnership and its partners to agreements with the IRS. Partners no longer have the right to participate in a partnership audit. LLC agreements must clearly define the responsibilities and indemnities available to this representative.

Listen as our authoritative panel discusses current partnership audit rules with a particular focus on their impact on private equity and other investment funds. The panel will discuss provisions in partnership or LLC agreements to address the new audit regime and the opt-outs and exclusions available.

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Outline

  1. The Bipartisan Budget Act of 2015 and phase-in of the partnership audit rules
  2. Exceptions and opt-out rules
  3. Implications of partnership level tax vs. individual partner level tax
  4. Issues for private equity and other investment funds
  5. Partnership representative: new final regulations issued under Section 6223
  6. Suggested amendments to an existing partnership or LLC agreements

Benefits

The panel will review these and other key issues:

  • What options are available to smaller partnerships and LLCs to opt out of the partnership-level taxation requirement?
  • How should private equity funds address tax inequities resulting from changes in ownership from one year to the next?
  • What provisions should be included in partnership or LLC documents to clearly define the role of the "partnership representative"?

Faculty

Baker, Adrienne
Adrienne M. Baker

Partner
Dechert

Ms. Baker focuses her practice on the taxation of private and regulated investment companies—including hedge...  |  Read More

McNulty, Mary
Mary A. McNulty

Partner
Holland & Knight

Ms. McNulty represents large business taxpayers in IRS audits, appeals and tax litigation, with emphasis on federal tax...  |  Read More

Meyercord, Lee
Lee S. Meyercord

Partner
Holland & Knight

Ms. Meyercord represents taxpayers in all stages of a federal tax dispute, including audits, administrative appeals and...  |  Read More

Attend on January 18

Early Discount (through 12/17/21)

Cannot Attend January 18?

Early Discount (through 12/17/21)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

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