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Worthlessness Deduction for Partnership Interests

Ordinary vs. Capital Losses, Abandoned vs. Worthless, Recourse vs. Nonrecourse Debt

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

This program is included with the Strafford CPE Pass. Click for more information.
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Tuesday, July 23, 2024

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

Early Registration Discount Deadline, Friday, June 28, 2024

or call 1-800-926-7926

This webinar will take a comprehensive look at the worthlessness deduction for partnership interests (including LLCs taxed as partnerships). Our panel of esteemed federal taxation veterans will review the (rather limited) available authority, contrast the worthlessness deduction with abandonment, and discuss the impact of recourse and nonrecourse debt on the worthlessness deduction. They will also discuss IRC § 165(g), which primarily applies to stock and certain bonds that become worthless during the tax years.

Description

The worthlessness deduction recently made the front page of the New York Times: "Trump may owe $100 million from double-dip tax breaks, audit shows" (New York Times, May 11, 2024) (citing panelist Prof. Walter Schwidetzky). We will examine the transaction that led to the article, whether the IRS’s position is justified, and why the worthlessness deduction may offer unique tax planning opportunities.

Listen as our panel of partnership taxation experts reviews the relevant authority and offers recommendations on calculating and deducting worthlessness deductions for partnership investors.

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Outline

  1. Introduction
  2. Worthlessness and Abandonment deduction outside of the partnership context, law and cases
    1. How worthless and abandonment deductions differ and what makes the worthlessness deduction unique
    2. Capital versus ordinary loss treatment
    3. Impact of Debt
    4. 165(g)
    5. Pilgrim’s Pride
  3. Worthlessness and Abandonment deduction within the partnership context, law cases, and rulings
    1. Echols
    2. MCM Investment Management LLC
    3. Rev. Rul. 93-80
    4. TAM 201929019 (which in part lead to the New York Times article)
  4. Conclusion

Benefits

The panel will review these and other critical issues:

  • Distinguishing abandoning an investment and a worthless partnership investment
  • Capital vs. ordinary loss treatment of investment losses
  • The impact of case law on the worthless investment deduction
  • Legislation needed to curb abuse of the worthlessness deduction

Faculty

Mandarino, Joseph
Joseph C. Mandarino

Partner
Smith Gambrell & Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

Schwidetzky, Walter
Walter D. Schwidetzky

Professor of Law
University of Baltimore

Professor Schwidetzky joined the faculty in 1985 and served as the director of the Graduate Tax Program from 1989 to...  |  Read More

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