LLC and Partnership Purchases: Entity Interests vs. Asset Sales

Basis Adjustments, Elections, Tax Reporting, and Structuring in Light of New Partnership Audit Regulations

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


Conducted on Tuesday, November 28, 2017

Recorded event now available

Program Materials

This webinar will provide partnership tax advisers with practical guidance on the tax ramifications of structuring the sale of a partnership or LLC entity as an asset sale vs. a sale of partnership interests. The panel will detail basis adjustments and available elections, describe the reporting and advisory challenges for seller and buyer, and discuss the impact of the partnership audit regulations on planning a partnership purchase.

Description

The sale of a partnership or LLC entity entails both negotiation and reporting challenges for tax advisers and is complicated by differing priorities of buyer and seller, including whether to structure the transaction as an asset sale vs. the sale of partnership interests. This calculus will be more complex due to new IRS partnership audit rules for 2018.

Under the new audit regulations, IRS can assert tax adjustments at the partnership level. Advisers to purchasers must assess a target’s potential prior tax exposure as part of pre-purchase diligence review.

Partnership transfers also create tax reporting and calculation difficulties for advisers. While buyers may claim a basis step-up with a §754 election—whether the transaction is structured as an asset sale or a partnership interest transfer—tax advisers must determine when an election is appropriate.

Another complexity is identifying and reporting ordinary gain from sale of §751 “hot assets” in a partnership transfer. Tax advisers must thoroughly understand the reporting requirements of a partnership interest or asset transfer.

Listen as our experienced panel provides a practical guide to the tax implications of selling assets vs. interest in transferring a partnership or LLC business.

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Outline

  1. Seller’s considerations in negotiating the transaction
  2. Buyer’s considerations in negotiating the transaction
  3. Impact of the new IRS Partnership Audit Regulations
  4. Tax reporting issues and basis adjustment elections
    1. Section 754 election due to transfer or distribution
    2. Section 743(b) adjustments
    3. Section 734(a) adjustments

Benefits

The panel will discuss these and other important topics:

  • The impact of entity type on the buyer’s and seller’s perspectives in a sale
  • New IRS partnership audit rules and affect on buyers’ strategy/approach in purchasing a partnership interest or assets
  • When a stock sale would benefit a purchaser
  • Determining the character of gain or loss upon a transfer
  • Holding period and basis rules for transfers of partial interests
  • Allocating purchase price allocation in an entity sale

Faculty

Michaels, Eric
Eric J. Michaels

Partner
Fox Rothschild

Mr. Michaels focuses his practice on general corporate matters, including mergers and acquisitions, tax and business...  |  Read More

Morgan, Alexander
Alexander Morgan, CPA

Partner, Tax Services
Fiondella Milone & LaSaracina

Mr. Morgan's areas of focus include accounting for income taxes under ASC 740, tax planning and consulting, and...  |  Read More

Milo, Angelina
Angelina Milo, CPA

Vice President, Tax Services Group
Meaden & Moore

Ms. Milo specializes in tax planning and general business consulting for closely held businesses including...  |  Read More

Other Formats
— Anytime, Anywhere

CPE On-Demand

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CPE Available

$182