Mastering Tax Complexities in the Sale of Partnership and LLC Interests

Navigating Character and Holding Period of Gain/Loss, Basis, Varying Interest Rule, Installment Sales, Capital Accounts

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


Conducted on Wednesday, September 5, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide accounting and tax professionals with a review of tax considerations involved with the purchase and sale of a partnership or LLC interest. The panel will address allocation of income gains and losses and will discuss tax implications on both the buy and sell side.

Description

Tax treatment of sales of interests in LLCs and partnerships is complicated and confusing for the unprepared, so our panel of veteran tax advisers will offer their experiences and best practices for tax accountants to avoid the most costly mistakes.

Advisers who grasp only the top-level tax consequences for the seller of a partnership interest are not prepared. Even experienced tax advisers can falter with concepts, like tax basis, holding periods, and character of gain or loss are some of the complex characteristics determined by different IRS rules.

Our panel will identify opportunities to minimize tax consequences in a disposition of an LLC or partnership interest. Selling an interest often requires consideration of profits or capital interests and whether an interest is subject to vesting.

Listen as our panel examines the complex tax rules for transferring LLC and partnership interests, discusses allocation of income gains and losses, and offers best practices for structuring transactions to obtain desired tax outcomes for the buyer and seller.

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Outline

  1. Tax rules related to sales or transfers of LLCs or partnership interests
    1. General rule
    2. Section 751 “hot asset” rules
    3. Purchaser issues
    4. Liquidating distributions (redemptions of partnership interest)
    5. Net investment income tax: application to transfers of partnership interests
  2. Special situations
    1. Mergers and consolidations
    2. Disguised sales of partnership interests
    3. Debt-for-equity exchanges and transfers
  3. Tax issues—basis adjustment rules
    1. Section 754 election due to transfer or distribution
    2. Section 743(b) adjustments
    3. Section 734 (b) adjustments

Benefits

The panel will review these and other key points:

  • Tax differences that result from choosing between sale or redemption of a departing partner’s interest
  • Whether a sale or redemption of other partners will create a taxable event to the remaining owners
  • How to determine the character of gain or loss upon a transfer
  • Holding period and basis rules for transfers of partial interests
  • Planning techniques to navigate the ACA and self-employment taxes

Faculty

Fowler, Lynn
Lynn E. Fowler

Partner
Kilpatrick Townsend & Stockton

Mr. Fowler focuses his practice on corporate and business tax law. He specializes in helping clients develop and...  |  Read More

Mandarino, Joseph
Joseph C. Mandarino

Partner
Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

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