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Structuring Section 708 Partnership Mergers Absent IRS Guidance: Avoiding Termination in Collapsing Transactions

Assets-Over vs. Assets-Up Transactions, Maintaining Continuity of Interest, and Deferring Tax Recognition

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

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Conducted on Wednesday, September 28, 2016

Recorded event now available

or call 1-800-926-7926

This CLE/CPE course will provide tax counsel and advisers with a practical guide to structuring partnership transactions to qualify for partnership merger treatment as a continuing interest under Section 708. The panel will identify tax issues of collapsing separate upper-tier partnerships (UTPs) and lower-tier partnerships (LTPs) into a single entity in the absence of definitive IRS guidance as to tax treatment, and will offer guidance on structuring partnership mergers to avoid tax recognition.


While Section 708 governs the tax treatment of partnership mergers and generally provides that a merged partnership is a continuation of one of the partnerships, it does not provide any definition as to what types of transactions qualify as a partnership merger.

In general terms, a partnership merger occurs in transactions where two or more partnerships combine and no more than one partnership emerges from the transaction. However neither the Code nor the regs provide concrete guidance on which partnership is deemed as the continuing entity in a merger transaction.

In certain partnership combinations, particularly those that “collapse” a UTP with an LTP, this can create significant tax risk. In the absence of definitive guidance, tax counsel and advisers must carefully structure such partnership mergers so the transactions can be clearly presented as a non-taxable continuation of one existing partnership.

There are several types of transaction structures that counsel may utilize to merge partnerships, notably the “assets-over” structure and the “assets-up” structure. Each of these forms carries some risk that the merger transaction may be characterized as a taxable termination of the existing partnerships. Tax counsel must be keenly aware of the structuring considerations in drafting a merger transaction.

Listen as our experienced panel provides a practical guide to the risks of structuring partnership mergers in the absence of definitive IRS guidance under Section 708.



  1. Structures of mergers and conversions: state rules vs tax rules
  2. Partnership merger and division rules vs corporate rules
  3. Section 708 “continuing interest” provisions
  4. Determination of which partnership is the “continuing” entity in a merger transaction
  5. “Assets-over” structures
  6. “Assets-up” structures
  7. Traps to avoid


The panel will discuss these and other important topics:

  • Determining which partnership is considered the continuing entity in a “collapsing” transaction involving a UTP and an LTP
  • Distinguishing "assets-over” vs. “assets-up” transaction structures
  • Anticipating the risks of 721 contribution of interest transactions
  • Avoiding “mixing bowl” traps in connection with a partnership merger


Joseph K. Fletcher, III
Joseph K. Fletcher, III

Glaser Weil Fink Howard Avchen & Shapiro

Mr. Fletcher has particular expertise ranging from the taxation of mergers and acquisitions to international taxation...  |  Read More

Mandarino, Joseph
Joseph C. Mandarino

Smith Gambrell & Russell

Mandarino is a Partner in the Tax Practice of Smith, Gambrell & Russell, LLP.  His practice focuses on...  |  Read More

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