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


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.

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

Learning Objectives

After completing this course, you will be able to:

  • Identify events that trigger a technical termination of a partnership under Section 708
  • Recognize the short-year filing requirements for technically terminated partnerships
  • Determine the appropriate basis and capital account carryover treatment from terminated partnership to deemed new partnerships
  • Decide under what circumstances successor partnerships to technically terminated partnerships should make new Section 754 elections
  • Discern amortization opportunities and reporting treatment for organizational or other amortizable costs occurring as a result of the termination event

Faculty

Matthew J. Donnelly, Esq.
Skadden Arps Slate Meagher & Flom, Washington, D.C.

Mr. Donnelly advises public and private companies on a broad range of domestic and international U.S. federal income tax issues, with particular focus on mergers, acquisitions, dispositions, joint ventures, debt and equity offerings, bankruptcy restructurings, transfer pricing, real estate investment trusts and tax-equity financings. He has significant experience with tax issues associated with related-party transactions.

Paul Schockett, Counsel
Skadden Arps Slate Meagher & Flom, Washington, D.C.

Mr. Schockett advises public and private companies on a broad range of U.S. federal income tax matters, with particular focus on U.S. and cross-border transactions. His practice includes significant work involving the tax aspects of partnership acquisitions and dispositions, joint venture and investment fund formations, and corporate mergers and acquisitions. He also advises clients with regard to the taxation of debt and equity financings, initial public offerings, bankruptcy restructurings and internal reorganizations. He frequently writes and lectures on tax-related topics, including partnership taxation, M&A transaction structuring, tax aspects of troubled company workouts, and renewable energy tax benefits.


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Recordings

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Program Materials

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Program Materials

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EA Credit

Strafford is an IRS approved continuing education provider and this course is approved for 2 enrolled agent (EA) credit hours.

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Customer Reviews

I appreciated the flow of the information offered and the ease at which I could follow the handouts.

Larry Bruck

WISS & Company

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Savas Greene & Company

I liked the concentration on specific issues and examples.

Edita Rimalovsky

Komisar Brady & Co.

Excellent seminar! It was efficient and the important topics were covered at just the right pace; no time was wasted covering information that the participants already knew.

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Barraclough & Associates

I liked the fact that there was more than one person presenting the material. It's nice to hear multiple perspectives.

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Cover & Rossiter

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