Tax Aspects of LLC Drafting: Target Allocations; Key Negotiated Tax Terms in JVAs; Top 10 Tax Mistakes When Drafting Agreements
Understanding the Key Tax Aspects and Negotiation Points of Partnership Agreement Drafting
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Tax Law
- event Date
Tuesday, July 22, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE/CPE course will provide tax counsel and advisers with the guidance necessary to correctly implement targeted partnership tax allocations. The panel will explain the complex requirements of IRC 704(b) and provide best practices for maximizing the tax benefits of targeting partnership allocations.
Mr. Snow joined the firm in 2023 and is a partner in the Tax Practice. His work covers a range of tax transactions, including advising REITs and other tax-exempt entities regarding the tax consequences of their investment strategies and other activities. Mr. Snow regularly advises institutional owners, operators, investment managers, and developers on tax aspects of joint ventures, financings, developments, acquisitions, dispositions, and restructurings with respect to real estate and other assets throughout the United States.
Mr. Snow assists clients with the structuring of real estate and other investment funds, with a particular focus on 1031 tax-deferred exchanges and New York transfer taxes.
Mr. Hagler joined the firm in 2021 as a member of the Tax Practice Group. He graduated from the Benjamin N. Cardozo School of Law and is admitted to practice in New York.
LLC agreement drafting is a must learn topic for many. A key aspect in drafting is the allocation section that includes two alternative approaches. Targeted partnership tax allocations are a popular choice for allocating income and loss among partners. Tax counsel and advisers must guide clients on whether this method will capture all allowed benefits or whether layer cake allocations should be utilized. For example, target allocation agreements may not satisfy regulatory safe harbors but can still meet the economic effect equivalence test or the partners' interest in the partnership test.
The panel will also address certain key points of negotiation when drafting tax provisions in partnership agreements. For example, tax practitioners place particular emphasis on 704(c) methodology, discretion over tax elections and decisions, audit determinations, and tax return preparation.
Lastly, the panel will discuss certain common tax mistakes practitioners make when drafting partnership agreements. Examples include improperly drafting tax boilerplate, omitting important tax provisions, neglecting to address tax return deadlines and review rights, and failures in tax audit language.
Listen as our experienced panel guides you through the LLC drafting process including determining how both targeted and layer cake allocation provisions are drafted and implemented.
- Targeted versus layer cake allocations
- Benefits and detriments of targeted allocations
- Tax allocation drafting best practices
- Key points of negotiation when drafting tax provisions
- 10 common drafting errors
The panel will review these and other high priority issues:
- When allocating income and loss among partners, what are the tax benefits of targeted versus layer cake partnership tax allocation methods?
- What are best practices in drafting targeted allocation provisions?
- Which tax provisions deserve special attention during drafting?
- Which tax provisions are commonly overlooked or not properly drafted?
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