Partnership Exchanges After Tax Reform: Structuring "Drop and Swap" and "Mixing Bowl" Transactions

Minimizing the Risk of an Unfavorable Audit Outcome; Impact of Tax Reform on Structuring Transactions

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

Conducted on Wednesday, February 27, 2019

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide tax advisers with knowledge and tools to advise partnership clients looking to convert to a tenancy-in-common form of ownership of real estate. Tax advisers may recommend such a conversion in contemplation of a future sale of property or to create a master limited liability company for various commonly owned real estate entities to allow partners to go their separate ways.


The "drop and swap" technique can be implemented to validate an exchange by former partners of undivided interests in real estate previously owned in partnership form. This process also comes with substantial complexities and risks. The structure must comply with rigid IRS 1031 rules for tenancies in common.

"Mixing bowl" structures potentially allow partners to separate their interests in multiple real estate entities on a tax-deferred basis by first consolidating commonly owned entities into a master limited liability company and subsequently liquidating that company.

Tax counsel must prepare for significant complexities when implementing a mixing bowl structure, including the disguised sale and anti-mixing bowl provisions of the Internal Revenue Code.

Listen as our experienced panel carefully reviews the drop and swap and mixing bowl techniques for purposes of tax-free or tax-deferred partnership asset exchanges. The panelists will examine best practices in structuring these transactions to maximize IRS recognition of the desired tax treatment and minimize challenges.



  1. Overview of Section 1031 partnership asset exchanges
  2. The impact of new tax law on the use of Section 1031
  3. Drop and swap transaction
  4. Mixing bowl transaction


The panel will review these and other priority issues:

  • What are the requirements of IRC Section 1031 on partnership asset exchanges?
  • How does tax reform impact the use of Section 1031 for certain assets?
  • How must you implement the drop and swap transaction to maximize 1031 treatment on the property exchanged?
  • How can the mixing bowl technique allow partners to separate their real estate holdings in commonly owned entities without triggering immediate tax?


Borden, Bradley
Professor Bradley T. (Brad) Borden

Professor of Law
Brooklyn Law School

Professor Borden’s research, scholarship, and teaching focus on taxation of real property transactions and...  |  Read More

Flavin, Marie
Marie C. Flavin

Senior Vice President/Northeast Regional Manager
Investment Property Exchange Services

Ms. Flavin is a member of the New York and Connecticut Bars, and has been practicing real estate law since 1992. She...  |  Read More

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