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Taxable Partnership Distributions: Anticipating and Mitigating Tax Consequences to Partners and Members

Distributions in Excess of Basis, Disguised Sales, Distributing Precontribution Gain Assets, Payment of Debt

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Friday, October 24, 2025

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, September 26, 2025

or call 1-800-926-7926
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This webinar will review situations when partnership distributions create taxable income. The panelist will discuss distributions in excess of basis, disguised sales, and distributions of specific assets that result in taxable income to partners and members.

Description

A significant advantage that partnerships and LLCs have over other entity choices is that distributions of assets to partners and members are generally not subject to tax. In fact, IRC Section 731(a)(1) states: "gain shall not be recognized to such partner, except to the extent that any money distributed exceeds the adjusted basis of such partner's interest in the partnership immediately before the distribution." Distributions exceeding a partner's basis in a partnership can occur unknowingly.

Marketable securities are included in the definition of money and are distributed at fair market value. Distributing marketable securities, paying down partnership liabilities, or distributing ordinary income assets, for example, can create additional, often unanticipated, tax liability for a partner at year-end. Tax professionals advising pass-through entities need to understand when distributions to partners or members could have significant tax implications.

Listen as our panelist describes situations that give rise to taxable partnership distributions.

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Outline

  1. Taxable partnership distributions: introduction
  2. Distributions in excess of basis
  3. Reduction in partnership liabilities
  4. Disguised sales
  5. Distributions of previously contributed property
  6. Disproportionate distributions
  7. Distributions of unrealized receivables and appreciated inventory
  8. Other considerations

Benefits

The speaker will cover these and other critical issues:

  • How a reduction in partnership liabilities impacts a partner's basis
  • Distributions of assets that are considered disguised sales
  • Recognition of precontribution gain on property distributions
  • Recommendations to circumvent unanticipated tax liability from distributions to partners

Faculty

Clayman, Jeffrey
Jeffrey Clayman, CPA, JD, LLM
Tax Senior Director
Alvarez & Marsal

Mr. Clayman has over 18 years of public accounting experience with a focus on for-profit businesses in many different...  |  Read More

Attend on October 24

Early Discount (through 09/26/25)

CPE credit processing is available for an additional fee of $39.
CPE processing must be ordered prior to the event. See NASBA details.

Cannot Attend October 24?

Early Discount (through 09/26/25)

CPE credit is not available on downloads.

CPE On-Demand

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