Structuring Tax Provisions in Partnership and LLC Operating Agreements

Effective Allocations With Flow-Through Entities

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

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Conducted on Tuesday, January 11, 2011

Recorded event now available

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Course Materials

This CLE course will update tax counsel on the key issues to address in operating agreements for partnerships and LLCs taxed as partnerships. The panel will offer best practices for crafting agreements that reflect effective tax compliance and planning going forward.

Description

Strategically structuring operating agreements for partnerships and LLCs taxed as partnerships is particularly complex when it comes to federal and tax considerations such as the allocation of income, gains, losses, deductions and credits.

Certain provisions are important but fairly boilerplate (e.g., alerting members that they're taxable under Subchapter K and providing for Sect. 754 elections in case of a liquidation). Tougher issues must also be addressed, such as safe harbors and providing for deficit capital account make-ups.

To achieve a partnership's goals while minimizing tax for the entity and its members, counsel must take a comprehensive approach to structuring an operating agreement that anticipates both tax benefits and pitfalls. Best practices are as critical as knowledge of tax law.

Listen as our authoritative panel of tax experts examines the key tax issues that must be considered and tax consequences of each provision when drafting the partnership/LLC agreement. Topics will include provisions concerning capital contributions, distributions, allocations and tax audits; the panel will also offer tax planning strategies.

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Outline

  1. Key tax issues/provisions
    1. Capital contributions
    2. Distributions
    3. Profits and losses
    4. Capital accounts
    5. Tax audit provisions
    6. Transactions between partners and partnerships
    7. Liquidations
  2. Tax consequences of those provisions
    1. Capital contributions
    2. Distributions
    3. Allocation provisions
    4. Capital accounts
    5. Tax audit provisions
    6. Transactions between partners and partnerships
    7. Liquidations
  3. Tax planning strategies for drafting partnership/LLC agreements

Benefits

The panel will analyze these and other critical partnership priorities:

  • Tax matters to address in partnership operating agreements, including allocating tax items on contributed property, distributing tax for partners' liabilities on shares of income, and alerting members to liquidation issues.
  • Specialized issues to consider, such as disproportionate allocations of income or loss items and giving partners an interest in exchange for future or past services.
  • Integration of effective tax planning for the entity and its members during the creation of the operating agreement.

Faculty

Andrew W. Ratts
Andrew W. Ratts
Partner
Winston & Strawn

He advises clients on tax issues relating to business formations, acquisitions, divestitures, debt reorganizations and...  |  Read More

David L. Forst
David L. Forst
Partner
Fenwick & West

He focuses on international corporate and partnership taxation and is the practice group leader of the firm's tax...  |  Read More

Carolyn R. Turnbull
Carolyn R. Turnbull
Director of Tax
Moore Stephens Tiller

She has extensive experience dealing with complex partnership and corporate tax issues, including special allocations,...  |  Read More

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