Umbrella Partnership Structures: Key Tax Considerations for Up-C and UPREITs, Compensation, Tax Agreements

Application of Sec. 162(m), Anti-Abuse Regs, Flow-Through Treatment, Maintaining Tax Deferrals, Basis

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


Conducted on Tuesday, September 22, 2020

Recorded event now available

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Program Materials

This CLE/CPE webinar will guide tax professionals on the essential tax issues for umbrella partnership structures. The panel will discuss tax considerations for Up-C and UPREIT structures, the application of Sec. 162(m) to compensation paid by partnerships, key issues stemming from tax receivable and tax protection agreements, and methods to maintain tax deferrals and flow-through treatment.

Description

Real estate investment trusts (REITs) and publicly traded partnerships (PTPs) frequently use umbrella partnership structures which allow partnerships to achieve liquidity through rights in certain publicly traded equity. Tax professionals must recognize the critical tax implications of umbrella partnership structures to implement practical tax planning tools for the taxpayer.

In an umbrella partnership C corporation structure (Up-C), an LLC or partnership undertakes a public offering through a newly formed corporation as a holding company that owns an interest in the pass-through entity. This allows the pass-through entity to undertake a public offering without disrupting the tax status of the pass-through entity, where the principal assets and operations remain.

Similarly, in an umbrella partnership real estate investment trust (UPREIT), all property is owned by an operating partnership, with a REIT owning an interest as a partner. Transactions undertaken as an UPREIT can be completed on a tax-deferred basis, since the owner does not acquire publicly-traded stock in the REIT, but instead receives units in the operating partnership.

If structured correctly, an Up-C or UPREIT structure provides tax benefits and exit strategy options for partners with the deferral of taxable gain and the ability to create specific tax attributes. However, tax professionals must recognize critical tax issues such as the allocation of liabilities, limitations under Section 162(m), and other tax considerations for Up-C and UPREIT transactions.

Listen as our panel discusses tax considerations for umbrella partnership structures, the impact of Section 162(m) on compensation paid by partnerships, and methods to ensure flow-through treatment and tax deferral, as well as addresses tax issues for the tax agreements.

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Outline

  1. Overview of umbrella partnership structures
  2. Tax issues for umbrella partnership-C corporation (Up-C)
  3. Tax issues for umbrella partnership real estate investment trust (UPREIT)
  4. Sec. 162(m); compensation paid by partnerships in Up-C and UPREIT

Benefits

The panel will review these and other key issues:

  • What are the key tax considerations for umbrella partnership structures?
  • What are the special tax considerations for Up-C and UPREIT structures?
  • How does the application of Section 162(m) impact umbrella partnership structures?
  • How are tax receivable or tax protection agreements used in these structures?
  • How can you ensure flow-through treatment and maintain tax deferrals?

Faculty

Cabrera, Emily
Emily E. Cabrera

Partner
Hunton Andrews Kurth

Ms. Cabrera's legal practice focuses on executive compensation and employee benefit arrangements (including their...  |  Read More

Davidson, James
James V. Davidson

Partner
Hunton Andrews Kurth

Mr. Davidson's practice focuses on all aspects of capital markets, mergers and acquisitions, corporate finance, and...  |  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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