Tax Issues in Transferring LLC and Partnership Interests

For the unwary and unprepared, the tax treatment of LLCs and partnerships is fraught with confusion and problems. Ownership interests in these entities are comparable to corporate shares, but there are many important distinctions. Different rules determine tax basis, holding periods, and the character of gain or loss.

Evaluating the tax consequences of a sale or disposition of an LLC or partnership interest often requires considering whether the transferring interest is a profits interest or a capital interest, whether the interest is subject to vesting, and the character and holding period of the assets held by the partnership. To avoid unfavorable tax consequences, tax counsel must know how to evaluate tax treatment of LLC and partnership interest transfers.

Listen as our panel of experienced tax attorneys examines the complex tax rules for transferring LLC and partnership interests and best practices for structuring transactions to obtain desired tax outcomes.

1. Tax rules related to sales or transfers of LLCs or partnership interests
2. Common issues and uncertainty related to the tax code
3. Best practices

The panel will review these and other key issues:

• What are the tax differences in choosing between a sale or redemption of a departing partner's interest?
• Will a sale or redemption of other partners create a taxable event for the remaining owners?
• How is the character of gain or loss determined upon a transfer?
• What are the holding period and basis rules for transfers of partial interests?
• What is the impact of the net investment income tax?

Learning Objectives

After completing this course, you will be able to:

• Recognize the tax rules that apply to the sale or transfer of an LLC or partnership interest
• Discern common pitfalls and uncertainties in the tax code
• Identify issues that may lead to unfavorable tax treatment
• Determine best practices to structure transactions to achieve intended tax consequences

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex income tax forms and schedules for partnerships and pass throughs; supervisory authority over other preparers/accountants. Knowledge and understanding of partnership structures, dissolution and related taxation; Familiarity with sale and redemption of a departing partners interest, characterizing gain and loss determined upon a transfer, and the Net Investment Income Tax.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).