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IRC 732(d) Partnership and LLC Basis Adjustments for Tax Counsel

Mastering Elective and Mandatory Basis Adjustments on Distributed Property Absent a Partnership 754 Election

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

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Conducted on Tuesday, March 1, 2022

Recorded event now available

or call 1-800-926-7926

This CLE/CPE course will provide tax counsel with comprehensive guidance on navigating the rules governing mandatory Section 732(d) basis adjustments on distributed property by partnerships where there is no Section 754 election in place. The panel will discuss the application challenges surrounding the basis adjustments and offer practical tips on when to utilize available elections under Section 732(d) to avoid costly and unanticipated tax consequences.

Description

Determining the tax consequences of the distribution of property by a partnership to a partner is a constant challenge for tax counsel and advisers. Section 754 provides an election allowing a partnership to adjust the basis of its assets when the partnership either distributes property or a partner transfers an interest in the partnership. However, there are instances where partners must make basis adjustments in the distributed property even absent a Section 754 election. This is where the basis rules of Section 732(d) come into play.

Section 732(d) applies when a partnership that has not made a 754 election distributes property to a partner who would be entitled to make a positive 743(b) adjustment to that property if a 754 election were in place. In distributions where Section 732(d) is applicable, the distributed property receives a basis adjustment as if the 743(b) adjustment were in effect.

Section 732(d) and its regulations provide for elective or mandatory basis adjustment, depending on the circumstances. However, the rules can be complex, and the IRS has the option of challenging the adjustment decision on a facts and circumstances basis.

Listen as our experienced panel provides thorough and practical guidance to navigating the basis rules of Section 732(d) in distribution scenarios where a Section 754 election is absent. The webinar will provide tax counsel with valuable tools for structuring operating agreements and distribution provisions to avoid costly tax consequences.

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Outline

  1. Section 732 basis rules
  2. Elective 732(d) basis adjustments
  3. Mandatory 732(d) adjustments
  4. Specific illustrations
    1. Partnership terminations
    2. Nonliquidating distributions with 732(d) adjustment
    3. Liquidating distribution with 732(d) adjustments
  5. Structuring issues

Benefits

The panel will discuss these and other important topics:

  • Under what circumstances do the regulations require partnerships to apply Section 732(d) special basis adjustments?
  • What are the mechanics for making an elective application of the Section 732(d) basis adjustment?
  • What are the rules for basis shifting from longer-lived to shorter-lived property?
  • What are the ordering rules for 732(d) basis allocation among multiple distributed properties?

Faculty

Martinez, Daniel
Daniel Martinez
Senior Attorney
Hunton Andrews Kurth

Mr. Martinez focuses on a broad range of federal income tax issues including cross-border transactions, capital market...  |  Read More

Milgrom, Joshua
Joshua Milgrom
Counsel
Hunton Andrews Kurth

Mr. Milgrom focuses on federal income tax issues related to investment funds, and real estate investment trusts...  |  Read More

Sibley, Kendal
Kendal A. Sibley
Partner
Hunton Andrews Kurth

Ms. Sibley focuses on federal income tax issues related to real estate investment trusts (REITs), investment funds, and...  |  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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