New Partnership Debt-for-Equity Exchange Regulations
Navigating Issues With COD Income, Gains and Losses, and Other Aspects of Sect. 108(e)(8)
Recording of a 110-minute CPE/CLE webinar with Q&A
This teleconference will provide advisors and taxpayers with a thorough review of the material terms and practical considerations involved with the finalized Sect. 108(e)(8) regulations on partnership debt-for-equity exchanges.
Outline
- Background
- Congress in 2004 amends Sect. 108(e)(8)
- To provide for treatment when debtor partnership issues capital or profits interest to creditor in satisfaction of partnership debt
- Partnership treated as satisfying debt for amount equal to FMV of interest issued to creditor
- Treasury Department in 2008 issues proposed regs addressing number of issues
- Congress in 2004 amends Sect. 108(e)(8)
- Final Sect. 108(e)(8) regs, Nov. 15, 2011 (TD 9557)
- For purposes of determining amount of COD income recognized by partnership, equity issued to creditor has FMV equal to liquidation value
- Four conditions for liquidation value safe harbor
- Application of Sect. 721 to debt-for-equity exchanges
- Creditors generally don’t recognize gain or loss on exchange of debt for capital or profits interest in partnership
- No bad debt deduction in debt-for-equity exchange
- Creditor’s basis will equal its tax basis
- For purposes of determining amount of COD income recognized by partnership, equity issued to creditor has FMV equal to liquidation value
- Practical situations likely to be faced now with debt-for-equity exchanges
Benefits
The panel will analyze these and other relevant topics:
- Determination of cancellation of debt income to a partnership that transfers an interest to a creditor.
- Arriving at fair market value of a partnership interest transferred to a creditor based on its liquidation value.
- Treatment of debt-for-equity exchanges under Sect. 721.
Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.
Faculty

Patrick McCurry
McDermott Will & Emery
He is attached to the firm's Passthroughs Group and focuses his practice on structuring and implementing... | Read More
He is attached to the firm's Passthroughs Group and focuses his practice on structuring and implementing transactions involving partnerships, LLCs and closely held corporations. His client base includes operating businesses, private equity and hedge funds, and real estate partnerships.
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Yoram Keinan
Shareholder
Greenberg Traurig
Mr. Keinan has more than 15 years of experience in U.S. and Israel federal tax law and specializes in U.S. and... | Read More
Mr. Keinan has more than 15 years of experience in U.S. and Israel federal tax law and specializes in U.S. and international taxation of financial products and institutions. Before coming to Greenberg Traurig, he worked as a national tax senior manager at Ernst & Young. He chairs the ABA Tax Section's Banking Committee.
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