Structuring Contributions of Appreciated Property to Partnerships: Avoiding Tax Recognition on Built-in Gain Assets

Navigating Allocation Challenges, the "Seven Year Rule" of Section 737, and New Debt Classification Regs

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


Conducted on Tuesday, December 20, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE/CPE webinar will provide tax counsel with a comprehensive guide to the tax consequences of contributing appreciated property to a partnership or multi-member LLC. The event will present a framework of the specific tax treatment of the contribution of appreciated property with debt, allocation of depreciation, both liquidating and nonliquidating distributions, and capital account adjustments and allocations.

Description

For partnerships and their tax advisers, the contribution of appreciated property to an entity in exchange for a partnership or LLC ownership shares presents specific tax challenges. While in most cases the exchange of assets for partnership interests is not a recognition event, a contribution of appreciated property can have significant consequences for both partnership operations and distributions.

An exception to the nonrecognition rule of Section 721 occurs when the contributed property is encumbered by debt, and the contributing partner is deemed to have been relieved of debt in an amount in excess of his basis in the contributed property. In these situations, the partnership must adjust its basis in the contributed asset to reflect the current gain recognition.

Partnerships that receive appreciated property face specific Code provisions on distributing the appreciated asset, as well as rules that require gain recognition when other partnership property is distributed to the contributing partner under the “seven year rule” of Section 737. Tax advisers must have a firm grasp of the rules governing the contribution of appreciated property to partnerships to avoid unforeseen tax and penalties resulting from incorrect distributions or allocations.

Listen as our experienced panel provides a comprehensive and practical guide to the tax consequences and rules of contributing appreciated property to partnerships.

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Outline

  1. General nonrecognition rules
  2. Current tax consequences for contribution of appreciated property with debt encumbrance
  3. Basis adjustments required by partnership
  4. Impact of distributions to contributing partner

Benefits

The panel will discuss these and other important topics:

  • Under what circumstances would contribution of appreciated property not qualify for nonrecognition under Section 721?
  • What is the “seven year rule” of Section 737 and how does it impact distributions to partners who have previously contributed appreciated property subject to debt encumbrance?
  • What is the impact on the contributing partner when the partnership distributes the appreciated property to other partners?

Faculty

Immerman, Andrew
L. Andrew Immerman

Partner
Alston & Bird

Mr. Immerman concentrates on federal income tax matters, including domestic and international tax planning and...  |  Read More

Mandarino, Joseph
Joseph C. Mandarino

Partner
Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

$297

Download

CPE Not Available

$297