Partnership Terminations: Mastering Section 708

Filing Short Year Returns, Revisiting Elections, Amortization Opportunities, Basis Adjustments and More

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, January 25, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers with a comprehensive and practical guide to partnership terminations. The panel will discuss identifying termination events, election strategies, short-year reporting, and partner-specific considerations in reporting partnership terminations.

Description

The tax treatment of a partnership termination is often challenging, especially when the termination is involuntary, whether due to insolvency or other cessation of operations, or to a “technical termination” arising from sales of 50% or more of the total partnership interests. Tax advisers responsible for preparing partnership tax returns need to have a practical understanding of the rules for reporting these involuntary terminations.

A partnership that undergoes a technical termination is deemed to have transferred its assets and liabilities from the “old” or terminated partnership to a deemed new partnership in exchange for an interest in that new partnership. The Treasury regulations governing Section 708 require technically terminated partnerships to file two separate short-year tax returns; the date of the technical termination and deemed transaction is the closing date of the legacy partnership and the opening date of the tax year for the new entity.

Section 708 technical terminations do provide partnerships the opportunity of deciding whether to continue certain irrevocable elections in the new entity. The new partnership may make a Section 754 election, or not, even if the prior partnership had made the election.

Listen as our experienced panel provides practical guidance on structuring partnership agreements and monitoring operations to avoid the costly consequence of a partnership technical termination.

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Outline

  1. Identifying technical termination events under Section 708
  2. Deemed termination and transfer to new partnership
  3. Status of irrevocable elections made by previous partnership
  4. Short-year filing requirements for terminated and successor partnership
    1. Basis in assets subject to 743(b) adjustment in terminated partnership
    2. Penalties for failure to file
    3. Capital account carryover
    4. Reporting new elections

Benefits

The panel will discuss these and other important issues:

  • Short-year filing requirements for partnerships subject to technical termination rules
  • Amortization of organizational or startup costs incurred after the ownership change event that caused the technical termination
  • Evaluating whether to make a Section 754 election for “new” partnership after technical termination
  • Basis calculations on assets in new partnership after a Section 708 termination
  • Filing requirements for other involuntary partnership terminations

Faculty

Donnelly, Matthew
Matthew J. Donnelly, Esq.

Skadden Arps Slate Meagher & Flom

Mr. Donnelly advises public and private companies on a broad range of domestic and international U.S. federal income...  |  Read More

Schockett, Paul
Paul Schockett

Counsel
Skadden Arps Slate Meagher & Flom

Mr. Schockett advises public and private companies on a broad range of U.S. federal income tax matters, with...  |  Read More

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