Partnership Debt Allocations and New IRS Regulations: Prepare Now for Sweeping Changes to Minimize Tax Consequences

Meeting Challenges of IRS Crackdown on Leveraged Partnerships, Mitigating Liabilities Under the Disguised Sales Rules

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


Conducted on Thursday, December 15, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE/CPE webinar will provide tax advisers with a thorough and practical guide to the challenges of allocating recourse and nonrecourse partnership debt, including a critical first look at the new Treasury regulations issued under Sections 707 and 752 of the Internal Revenue Code on Oct. 4, 2016. These regulations significantly change the rules related to the allocation of partnership liabilities and partnership “disguised sales.” The new regulations will cut back sharply on deferral opportunities using “leveraged partnerships” and will eliminate gain deferral through the use of “bottom guarantee” structures.

Description

Tax practitioners that advise on partnership transactions will need to quickly familiarize themselves with the new regulations. The regulations will have an immediate and dramatic impact on virtually all partnerships that have debt as part of their capital structures, requiring an immediate examination of clients’ existing partnership structures to identify debt structures that may trigger taxable gain. Moreover, taxpayers have only a limited window to implement partnership contributions or leveraged partnership transactions before many of the key provisions of the regulations take effect. Once the window closes—or, in some cases, even before it closes—taxpayers will be precluded from engaging in many common tax-deferred partnership transactions.

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Outline

  1. Scope of final regulations under Sections 707 and 752
  2. Distinguishing recourse from nonrecourse debt
  3. Impact of new rules on common business structures such as "leveraged partnerships" and "asset drop-down transactions"
  4. General rule on treatment of "bottom dollar" guarantees under the new regulations
    1. Exception for small reimbursement rights
    2. Exception for "vertical slice" obligations
    3. Form 8275 disclosure requirements
    4. Transition rule for impacted partners
  5. Anti-Abuse rule for determining if a payment obligation should be respected
  6. Planning steps to avoid current tax consequences

Benefits

This panel will help practitioners navigate the challenges posed by the new regulations by discussing these and other important topics:

  • Distinguishing recourse from nonrecourse partnership debt
  • The impact of the new regulations on common business transactions, such as:
    • "leveraged partnerships" and
    • asset “drop-down” transactions
  • What tax advisers must do now to prepare partnership clients to plan for the new regulations

Faculty

Krause, Brian
Brian Krause

Partner
Skadden Arps Slate Meagher & Flom

Mr. Krause represents clients on a broad range of U.S. and international tax matters, with particular emphasis on...  |  Read More

Levy, David
David F. Levy

Partner
Skadden Arps Slate Meagher & Flom

Mr. Levy represents clients on a wide range of transactions involving publicly-traded and privately-held real estate,...  |  Read More

Gianou, Nickolas
Nickolas Gianou

Skadden Arps Slate Meagher & Flom

Mr. Gianou represents clients on a wide range of tax matters, including partnership transactions, public and private...  |  Read More

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