Partnership Exchanges: Structuring "Drop and Swap" and "Mixing Bowl" Transactions

Minimizing the Risk of an Unfavorable Audit Outcome

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

Conducted on Wednesday, August 30, 2017

Recorded event now available

or call 1-800-926-7926
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.

Counsel must also contend with the absence of specific IRS revenue rulings addressing the ability to defer tax in an exchange using the drop and swap structure.

“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 review 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. Drop and swap transaction
  3. Mixing bowl transaction


The panel will review these and other key issues:

  • What are the requirements of IRC Section 1031 on partnership asset exchanges?
  • 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?


Todd D. Keator
Todd D. Keator

Thompson & Knight

Mr. Keator represents clients in general tax matters including corporation, partnership, and LLC formation and...  |  Read More

Crawford Moorefield
Crawford Moorefield

Strasburger & Price

Mr. Moorefield provides counsel with regard to federal income taxation and structuring complex business transactions...  |  Read More

Wilensky, Mark
Mark E. Wilensky

Meltzer Lippe Goldstein & Breitstone

Mr. Wilensky focuses his practice on tax law, with a significant part of his practice advising clients looking to sell,...  |  Read More

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