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Partnership Non-Cash Property Distributions: Hot Assets, Disguised Sales, and Other Critical Tax Challenges

Structuring Partnership Distributions Without Triggering Gain Recognition Under Secs. 704(c), 707, 731(c), 737, 751, and 752

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

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Conducted on Thursday, May 21, 2020

Recorded event now available

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This CLE/CPE course will guide tax professionals on the tax issues stemming from partnership non-cash property distributions. The panel will discuss critical issues in structuring non-cash property distributions, key exceptions, questions in applying Sections 751, 704(c), 707, 731(c), 737, and 752, and other items to avoid tax liability on distributions.

Description

One of the primary advantages of conducting business as an entity taxed as a partnership is the ability to make non-cash property distributions with no tax liability. However, tax professionals must recognize circumstances that can trigger gain recognition and, if possible, use methods to avoid any unintended tax liability.

Generally, partnership distributions of non-cash property do not result in recognition of gain. The application of complex rules, such as those regarding hot assets, disguised sales, marketable securities, and other provisions must be considered by tax counsel and advisers to avoid triggering gain.

Listen as our panel discusses critical issues for partnership non-cash property distributions. The panel will also offer practical guidance in structuring distributions to avoid gain recognition.

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Outline

  1. Non-cash property distributions in corporations vs. partnerships
  2. Critical issues in structuring non-cash distributions
    1. Sec. 751(b) hot asset rules
    2. Sec. 707(a)(2)(B) disguised sale rule
    3. Triggering gain on distributions of contributed property: Secs.704(c) and 737
    4. Marketable securities; Sec. 731(c)
    5. Reduction in liability share under Sec. 752(b)
  3. Best practices in structuring non-cash partnership distributions to avoid gain recognition

Benefits

The panel will review these and other key issues:

  • How do non-cash distributions differ in a corporation vs. a partnership?
  • What are the principal issues in structuring non-cash partnership distributions?
  • What issues are presented under Sec. 751(b) hot asset rules?
  • How can you ensure that a transaction avoids the application of Sec. 707(a)(2)(B) disguised sale rules?
  • What rules apply to distributions of contributed property and marketable securities?
  • How can gain recognition be triggered if the exchange of property results in a reduction of a partner's share of liabilities?

Faculty

Hager-Benjamin
Benjamin W. Hager
Member
Frost Brown Todd

Mr. Hager's practice includes the areas of business entity formations, mergers and acquisitions, reorganizations,...  |  Read More

Mooney, Martin
Martin E. Mooney
Member
Frost Brown Todd

Mr. Mooney practices in the individual and business tax areas and has extensive experience representing partnerships,...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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