Section 704(c) Capital Account Book-Ups: Revaluation of Partnership Assets

Triggering Events for Revaluations, Effects of Revaluations on Allocations of Tax Items

Note: CLE credit is not offered on this program

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


Conducted on Thursday, June 13, 2019

Recorded event now available

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Program Materials

This webinar will provide tax advisers with a practical guide to the complexities of capital account revaluations or "book-ups" under Section 704. The panel will detail the circumstances and events under which a partnership may revalue its property to FMV to adjust the capital accounts of its members.

Description

Maintaining partners' capital accounts often presents significant challenges for even the most experienced practitioners. It can be particularly difficult to understand the capital account maintenance rules, and the Section 704(c) effects, in situations in which one or more partners have contributed built-in gain or built-in loss property.

Under certain circumstances, a partnership may be entitled to restate the partners’ capital accounts to FMV, commonly called a "book-up" of the partners' capital accounts. A book-up can be beneficial in order to maintain intended economics of the partnership. But it can also result in complex Section 704(c) consequences.

Listen as our panel of experienced tax practitioners provides a practical guide to Section 704 capital account book-ups.

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Outline

  1. Overview of Section 704(b) capital account maintenance rules
  2. “Forward” Section 704(c): contributions of built-in gain or built-in loss property
  3. Book-ups: when are they permitted, how are they done, and what are the consequences?
  4. “Reverse” Section 704(c): tax allocations following a book-up

Benefits

The panel will review these and other key issues:

  • What are the triggering events that will permit a revaluation of partnership assets?
  • What are the benefits and detriments of revaluations?
  • Mechanics of book-ups
  • How might a book-up affect subsequent book and tax allocations?

Faculty

Mathieu, Kate
Kate L. Mathieu

Atty
Skadden Arps Slate Meagher & Flom

Ms. Mathieu advises public and private companies on a broad range of U.S. federal income tax matters, with a particular...  |  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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