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 Wednesday, December 2, 2020

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 challenging to understand the capital account maintenance rules and Section 704(c) effects in situations where 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 to maintain the intended economics of the partnership. But it can also result in complex Section 704(c) consequences. The current requirement to report unrecognized 704(c) gains on Schedule K-1 has made understanding these transactions critical for tax professionals.

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:

  • Understand the IRC 704(b) capital account maintenance rules.

 

  • Ascertain the impact of contributions of built-in gain or built-in loss property.
  • Identify the mechanics of book-ups.
  • Recognize the benefits and detriments of revaluations.
  • Determine when reporting of unrecognized IRC 704(c) gains and losses must be reported on Schedule K-1.

Faculty

Langdon, Nancy
Nancy L. Langdon

Managing Director, WNTS M&A Tax
PwC

Ms. Langdon has 16 years of experience working with clients on a broad range of tax issues and specializes in complex...  |  Read More

Stoner, Megan
Megan Stoner

Senior Manager, WNTS M&A Tax
PwC

Ms. Stoner specializes in partnership taxation. She has significant experience assisting clients with complex...  |  Read More

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