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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Wednesday, August 18, 2021

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will discuss the principle tax ramifications of equity investments in limited liability companies (LLCs) and limited partnerships (LPs) by private equity, venture capital, and angel investment funds.

Faculty

Seth Lebowitz
Partner
Sadis & Goldberg, LLP

Mr. Lebowitz advises clients on the tax-efficient planning and execution of a broad range of transactions, with a particular focus on the formation, operation and investing activities of private equity and hedge funds.

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Brigid Morrissey
Senior Manager
CohnReznick LLP

Ms. Morrissey serves private equity funds, primarily in the middle market. Throughout her career, she has worked with companies across multiple industry segments, including manufacturing and distribution, real estate, retail, and technology, many of which are held by private equity and venture capital sponsors. Ms. Morrissey has provided closely-held corporations, partnerships, and high-net-worth individuals a wide range of tax-related services, including tax planning and compliance, selection of and changes in accounting methods, tax credit advisory services, cost segregation studies, representation before IRS and other taxing authorities, and advisory services to businesses and their owners.  

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Description

Historically, most private fund investment activity has been focused on C corporations. However, given the tax advantages and flexibility afforded LLCs and LPs, private equity counsel must understand the tax issues presented by private investment fund investments in these entities.

Although the tax benefits of pass-through entities can add significant value to an investment, there are also unique tax considerations (and potential pitfalls) that investors must consider. Investors must also understand their rights and obligations and those of managing partners and other investors under the governing documents.

Listen as our authoritative panel of practitioners discusses legal issues in investing in pass-through entities, the advantages and disadvantages of LLCs as portfolio companies, various entity investment structures, and the tax ramifications of equity investments.

Outline

  1. Advantages and disadvantages of LLCs and LPs as portfolio companies
    1. Basis step-up (cash flow benefits and exit value)
    2. Tax-free leveraged recaps
    3. Outside basis adjustments
    4. Qualified Business Income Deduction
    5. Pre-Tax IRR
    6. Comparison to corporations
      1. Corporate income tax rate
      2. Qualified Small Business Stock
  2. Special tax issues
    1. Considerations of tax-exempt and foreign investors
    2. Basis step-up
      1. 743(b) adjustments
      2. 704(c) basis step-up for growth equity investments
      3. Avoiding the anti-churning rules
    3. Profits interests
    4. Negotiating tax distributions
  3. Greater flexibility in establishing rights of minority equity holders

Benefits

The panel will review these and other noteworthy issues:

  • Considering the pros and cons of investing in pass-through entities
  • Choosing the appropriate investment structure
  • Negotiating tax distributions for preferred equity investments
  • Greater flexibility in establishing rights of minority equity holders