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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Preparer

Date & Time
  • event Date

    Friday, December 8, 2023

  • schedule Time

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

  • timer Program Length

    110 minutes

Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

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

$197.00
CPE
ALL

This webinar will reveal methods to optimize estate and gift taxes on carried interests. The panelist will point out valuation issues to avoid, examples of optimal fund structures, and exceptions to IRC Section 2701 that can mitigate estate and gift taxes paid and the use of the unified credit on the carry of a general partner (GP).

Faculty

Anthony Venette
Business Advisory
DeJoy & Co., Advisors & CPAs

Mr. Venette provides business valuation and advisory services to corporate and individual clients of DeJoy & Co. He has expertise consulting clients through gift & estate tax planning and succession planning. Mr. Venette has experience advising on corporate transactions, mergers & acquisitions, deal structuring, and financial due diligence. Before joining DeJoy, Mr. Venette had 5+ years consulting high net worth individuals and small to mid-sized companies on business valuation and tax planning. Additionally, he led financial planning and analysis for a large multinational company. Mr. Venette is a member of the American Institute of Certified Public Accountants’ Forensic and Valuation Services Section. He is also a member of the Estate Planning Council of Rochester. Mr. Venette earned his MBA and BS in Accounting from St. John Fisher University. He is Accredited in Business Valuation by the AICPA and has a Six Sigma Yellow Belt. 

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Description

A GP's profits interest in a private equity fund, offered in exchange for services, is referred to as a carried interest. In addition to this interest, the GP will likely have a direct interest in the partnership and receive management fees. Partnership agreements for these funds commonly contain waterfall allocations that ensure that original amounts invested and preferred returns are distributed to other investors before any payment is made for the carried interest. These provisions optimize the value of the carried interest, which retains its potential to appreciate substantially, making these interests prime fodder for estate planning.

Since the current estate tax exemption, $12,920,0000 in 2023, will end in 2025, the need for estate planning for carried interests is imminent. Key to this planning is avoiding the impact of IRC Section 2701. This section can require that a gift of a carried interest also include the GP's other interests in the partnership, thereby negating the benefit of the transfer. There are planning techniques to avoid this inclusion. These include a valuation slice exception and the gift of a derivative, requiring a gift tax return to be filed. Trust and estate practitioners working with private equity fund investors must understand how to optimize transfer taxes paid for carried interests.

Listen as Anthony Venette, CPA/ABV, Business Advisory at DeJoy & Co., details strategies to lower estate taxes for GPs serving private equity funds.

Outline

  1. Back to Basics: Gift & Estate Tax
  2. Back to Basics: Business Valuation
  3. Estate Tax Optimization
  4. Fund Structures
  5. Valuing Carried Interest
  6. Gifting Opportunities and Pitfalls
  7. Carried Interest Derivatives

Benefits

The panelist will review these and other critical issues:

  • Key considerations when selecting a valuation expert
  • How fund structures impact a carried interest
  • Addressing the reach of Section 2701 when gifting a carried interest
  • Using derivative contracts to transfer the value of a carried interest
  • Examples of specific estate planning techniques to optimize estate tax on carried interests

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify planning techniques to minimize utilization of the estate tax exemption for holders of carried interests
  • Determine ways to avoid the impact of Section 2701 on transfers of carried interests
  • Decide specific qualifications needed for appraisers who value carried interests
  • Ascertain when Section 2701 applies to partnership transfers

  • 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 preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

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).