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

A live 90-minute premium CLE/CPE video webinar with interactive Q&A


Wednesday, January 5, 2022

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE/CPE course will provide tax counsel with a comprehensive guide to the tax consequences of contributing appreciated property to a partnership or multi-member LLC. The panel will discuss the specific tax treatment of appreciated property's contribution with debt, depreciation allocation, 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.

Currently, partnerships that receive appreciated property face specific Code provisions on distributing the appreciated asset and rules that require recognition when other partnership property is distributed to the contributing partner under the "seven-year rule" of Section 737. However, recently proposed tax law changes can significantly impact or repeal this rule. 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 the contribution of appreciated property with debt encumbrance
  3. Basis adjustments required by the partnership
  4. Impact of distributions to contributing partner
  5. Impact of recently proposed tax law changes

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?
  • What impact will the recently proposed tax law changes have on these rules?

Faculty

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

Additional faculty
to be announced.
Attend on January 5

See NASBA details.

Cannot Attend January 5?

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. CPE credit is not available on recordings. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

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