New IRS Partnership Transfer Rules for Contributions of Appreciated Property to Partnerships With Foreign Partners

Understanding Impact of IRS Notice 2015-54 and Preserving Nonrecognition Treatment

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

Conducted on Tuesday, October 20, 2015

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax counsel with an exploration into the ramifications of IRS Notice 2015-54, released Aug. 6, 2015, which will generally make a taxable event of any contribution of appreciated property by a U.S. person to a related partnership, unless strict requirements are satisfied. The panel will review the current rules, describe the changes — the most important of which are already in effect — and discuss tools to work around the recognition requirement.

Description

The IRS issued Notice 2015-54 on Aug. 6, 2015, which announced the Service’s intent to issue regulations that will dramatically alter the tax treatment of partnerships whose partners include both a U.S. partner and a related foreign partner, such as a controlled foreign corporation of the U.S. partner. In many instances the forthcoming regulations will remove or greatly reduce the nonrecognition benefits for contributions to partnerships, and the most crucial provisions of the regulations will apply to transfers taking place on or after August 6, 2015.

Because partnerships comprising domestic and related foreign partners are components of many multinational business structures, the potential impact of the proposed rules is broad and significant. In the past, many outbound transfers to partnerships were tax-free, even though comparable transfers to corporations would have been taxable by virtue of Code Section 367. As a result of the Notice, many previously tax-free transfers to partnerships are now taxable.

The new regulations will contain several provisions that may preserve nonrecognition treatment in certain scenarios. Taxpayers may still qualify for nonrecognition treatment if they use the “gain deferral method,” and avoid specified “acceleration events.” Tax counsel must know the technical requirements and drafting opportunities of the new rules to avoid adverse tax consequences arising from partnership contributions.

Listen as our expert panel goes into detail on the forthcoming regulations, and provides practical suggestions for leveraging the new rules to preserve nonrecognition treatment.

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Outline

  1. Current rules on contributions to foreign partnerships
  2. Notice 2015-54 rule changes requiring recognition of gain on contribution of appreciated property
  3. How to defer gain recognition
  4. Effect on IRS authority to make adjustments under Section 482

Benefits

The panel will discuss these and other critical questions:

  • What are the technical terms and mechanics of the new regulations?
  • What effect will the new regulations have on existing partnership arrangements?
  • What are the requirements for the gain deferral method?

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

Moseley, Matthew P.
Matthew P. Moseley
Alston & Bird

Mr. Moseley's pracitce focuses on the U.S. federal income tax consequences of domestic and cross-border...  |  Read More

Ripley, Heather
Heather Ripley
Alston & Bird

Ms. Ripley's practice focuses on federal and international tax services for a range of clients, including...  |  Read More

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