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

Minimizing the Risk of an Unfavorable Audit Outcome

A live 90-minute CLE/CPE webinar with interactive Q&A

Wednesday, August 30, 2017 (in 9 days)
1:00pm-2:30pm EDT, 10:00am-11:30am PDT

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?

Learning Objectives

After completing this course, you will be able to:

  • Identify tools to advise partnership clients looking to convert from a partnership to a tenancy-in-common form of ownership or to create a master LLC to allow partners to separate
  • Recognize sophisticated planning techniques involved with drop and swap and mixing bowl transactions applicable to both partnerships and LLCs
  • Discern the requirements of IRC Section 1031 and the IRS’s strict requirements for tenancy-in-common ownership of rental real estate
  • Distinguish restrictions on mixing bowl transactions, including the disguised sale and anti-mixing bowl provisions


Todd D. Keator, Partner
Thompson & Knight, Dallas

Mr. Keator represents clients in general tax matters including corporation, partnership, and LLC formation and operation; tax-deferred 1031 exchanges; federal and state tax planning and advice; real estate syndications (TICs, REITs, LPs and LLCs); tax structuring for mergers, acquisitions, divisions and financing; private equity transactions; MLP formation and acquisitions; private toll road development; oil and gas tax; and FIRPTA tax. He provides clients with transactional planning and advice, document preparation, and preparation of tax opinions on federal and state tax implications of business transactions.

Crawford Moorefield, Partner
Strasburger & Price, Houston

Mr. Moorefield provides counsel with regard to federal income taxation and structuring complex business transactions for corporations, partnerships, limited liability companies and other business entities. He has extensive experience in complex business restructurings, including those involving distressed corporations and partnerships, as well as matters related to complex debt and equity instruments. He also has significant experience in structuring tax-advantaged asset monetizations, including publicly traded partnerships, royalty trusts, real estate investment trusts and other tax-deferred asset disposition strategies. Other significant portions of his practice involve taxation of oil and gas, timber and real estate investments and financial derivatives. He has written and lectured on partnerships, bankruptcy and real estate taxation.

Mark E. Wilensky, Partner
Meltzer Lippe Goldstein & Breitstone, Mineola, N.Y.

Mr. Wilensky focuses his practice on tax law, with a significant part of his practice advising clients looking to sell, exchange, lease, or refinance real estate and take advantage of the tax deferral opportunities offered by section 1031 exchanges, installment sales, and long-term lease agreements. He frequently advises clients operating as partnerships, limited liability companies, or S corporations on ways to achieve tax deferral from an exchange of property without triggering gain from receipt of taxable “boot.” He also counsels business entities on ways to divide a business among shareholders or partners without triggering taxable gain or otherwise counseling clients operating as limited liability companies or S corporations on ways to take advantage of the lower tax rates on capital gains when selling all or a portion of a business.

Live Webinar

Live Webinar $297.00

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This webinar is eligible for at least 1.5 general CLE credits.

CLE credits are not available for PR.

*In KS, OH, PA, for more than 1 attendee on the connection you must contact Strafford CLE via email or call 1-800-926-7926 ext. 35 prior to the program for special instructions.

CPE on Live Event

Continuing Professional Education credit processing is available for an additional fee per person. You may register for CPE credit processing at any time before or after the program. To qualify for CPE you may not listen via the telephone.

This program is eligible for 1.5 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex income tax forms and schedules for partnerships and pass throughs; supervisory authority over other preparers/accountants. Knowledge and understanding of partnership structures, dissolution and related taxation; Familiarity with sale and redemption of a departing partners interest, characterizing gain and loss determined upon a transfer, and the 1031 Like-Kind Exchange rules

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.


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Tax Law Advisory Board

Robert S. Barnett


Capell Barnett Matalon & Schoenfeld

William H. Byrnes

Associate Dean, Special Projects

Texas A&M University Law

Robert A.N. Cudd

Senior Partner


Patrick Derdenger

Tax Partner

Steptoe & Johnson

Janice Eiseman


Cummings & Lockwood

Lynn Fowler


Kilpatrick Townsend & Stockton

Edward Froelich

Of Counsel

Morrison & Foerster

Daniel L. Gottfried


Hinckley Allen

J. Leigh Griffith

Partner and Practice Group Leader - Tax

Waller Lansden Dortch & Davis

L. Andrew Immerman


Alston & Bird

Mark S. Lange



Joseph C. Mandarino


Smith Gambrell & Russell

Lori Mathison

Partner, Cross-Border Transactions Tax

Fraser Milner Casgrain

Christian M. McBurney


Arent Fox

Suzanne Ross McDowell

Partner, Tax-Exempt Organizations

Steptoe & Johnson

Todd Reinstein

Partner, Corporate Tax and Due Diligence

Pepper Hamilton

Alex Sadler


Morgan Lewis

Susan Seabrook


Buchanan Ingersoll & Rooney

Peter Stathopoulos

Managing Director, State and Local Tax Practice

Bennett Thrasher

Eric Tresh

Partner & Co-Chair, State & Local Tax Practice

Sutherland Asbill & Brennan

Amanda Wilson


Lowndes Drosdick Doster Kantor & Reed

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