Partnership Tax Issues in Estate Planning: Key Challenges and Guidance for Trusts and Estates Counsel

Capital Accounts, Basis Rules, Cash Distributions; Tax Implications of Partnership Assets, Transfers, Debts and Liabilities

Note: CPE credit is not offered on this program

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

Conducted on Tuesday, August 4, 2020

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will provide trusts and estates counsel guidance for recognizing and overcoming critical tax issues of partnerships in estate planning. The panel will discuss the fundamentals of partnership income tax rules for estate planners, maintaining capital accounts, basis rules, traps involving cash distributions, transfers, and partnership debts and liabilities. The panel will also discuss key planning opportunities and provide useful techniques for using partnerships in estate planning.


Partnership interests and assets can have significant tax consequences for trusts and estates. Estate planners must recognize critical aspects of partnership taxation and available planning techniques to adequately assess potential tax issues for trusts and estates as such relates to partnership interest and assets.

Family businesses taxed as partnerships for income tax purposes, including LLCs taxed as partnerships, can use partnership income tax law provisions to accomplish estate planning goals. With effective tax planning, significant reallocations of income and transfer of current value or appreciation to subsequent generations can be achieved without running afoul of other applicable tax rules for trust and estates.

Estate planners must grasp a complete understanding of partnership income tax rules in the context of estate planning, the importance of maintaining capital accounts, basis rules, and potential traps of certain distributions and transfers.

Listen as our panel discusses essential partnership tax rules impacting trusts and estates and provides effective planning techniques for the use of partnerships in estate planning.



  1. Common partnership tax issues for estate planners
    1. Partnership assets
    2. Capital accounts
    3. Pass-through taxation
    4. Basis rules
  2. Distributions
    1. Cash distributions; current vs. liquidating distributions
    2. Exceptions
      1. Marketable securities
      2. Disguised sale rules
      3. "Mixing bowl" rules
      4. "Hot" assets
  3. Partnership debts and liabilities
  4. Essential planning techniques for counsel


The panel will review these and other key issues:

  • What are the critical partnership tax issues for estate planners?
  • What issues are presented by the basis rules concerning partnership assets?
  • What are the potential tax traps relating to cash distributions, transfers, and partnership debts and liabilities?
  • How do the disguised sale, mixing bowl, and hot asset rules apply to partnerships in estate planning?
  • How do you calculate the capital account and basis of transferred interests?
  • What planning opportunities are available to estate planners?


Capdevielle, Cliff
Cliff Capdevielle

Managing Attorney

Mr. Capdevielle has been developing sophisticated tax planning strategies and resolving tax disputes for clients more...  |  Read More

Cohn, Beth
Beth S. Cohn

Jaburg Wilk

Ms. Cohn chairs the firm’s Estate Planning and Business Law Department. As both a Tax Specialist certified by the...  |  Read More

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