Tax Issues in Sale of Partnership and LLC Interests: Structuring the Purchase Agreement

Best Practices for Drafting and Negotiating Tax Provisions

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

Conducted on Thursday, July 19, 2018

Recorded event now available

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Course Materials

The CLE/CPE course will review the tax issues involved with structuring purchase agreements for partnership or LLC interest. The panel will address allocation of income gains and losses, allocation of purchase price, payment terms in the purchase agreement, the impact of new tax law and discuss tax considerations from both the buy and sell side.

Description

The IRC Code provisions regarding the sale or transfer of a partnership or LLC interest are complex, and counsel representing both parties should have a thorough understanding of the income tax consequences of the transaction. Tax issues impact the negotiation, structure and price of the deal terms.

Practitioners must consider a broad spectrum of buy- and sell-side issues, including evaluating the pros and cons of an asset sale vs. an entity sale. In the case of an asset sale, counsel must also understand the types of assets involved in the transaction.

New tax law and other implications involved in structuring payment terms and deferred payment arrangements are significant. Counsel must assess the allocation of the purchase price, taking into account the tax implications of the price allocation and the different tax impacts on both the buyer and seller.

Listen as our panel of experienced tax attorneys outlines and analyzes the myriad of tax issues from the buyer’s and seller’s perspective when negotiating, structuring and crafting the terms of a purchase and sale agreement in connection with the sale or transfer of a partnership interest.

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Outline

  1. Tax implications for buyer and seller
    1. Amount and character of seller’s gain or loss
    2. Buyer’s cost basis and the Section 754 election
    3. Installment reporting for selling partner
    4. Allocation of income and loss between buyer and seller (entire vs. partial interest, Section 706)
  2. Structuring the sale: asset vs. entity sale
  3. Allocation of purchase price in an asset sale
    1. Type of assets sold
    2. Section 751 hot assets
    3. Tax implications of the tax allocations
    4. Buyer vs. seller tax considerations
  4. Structuring payment terms
    1. Cash
    2. Installment payment
    3. Balloon payment
    4. Covenants not to compete
    5. Consulting agreements
  5. Factors to consider under new tax law in negotiating and drafting purchase agreements

Benefits

The panel will review these and other crucial questions:

  • How can counsel guide clients in evaluating the pros and cons of an asset sale vs. an entity sale?
  • What tax issues must counsel consider in allocating the purchase price?
  • What are the tax implications in structuring payment terms and deferred payments in connection with the sale of a partnership interest?
  • How does new tax law factor into negotiating and drafting purchase agreements for partnership and LLC interest?

Faculty

Keida, Brian
Brian Keida, CPA
Tax Senior Manager
Crowe

With more than thirteen years of public accounting experience, Mr. Keida’s industry focus has been serving...  |  Read More

Resner, Chad
Chad J. Resner, CPA, JD
Tax Director
Baker Tilly Virchow Krause

Mr. Resner, Firm Director with Baker Tilly Virchow Krause, LLP, joined the firm in 2016 and is a member of the...  |  Read More

Smithweck, Brian
Brian K. Smithweck
Partner
Adams and Reese

Mr. Smithweck practices in the areas of corporate, partnership and limited liability company planning, estate planning,...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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