Description
There are several issues faced by partnerships and LLCs when handling profits interest and compensation matters. These issues are unique to partnership and LLC compensation structures due to the differences in the tax regime applied to entities taxed as partnerships compared to those taxed as corporations. Tax counsel and advisers must have a thorough knowledge of the potential legal and tax implications of issuing profits interest to avoid any unintended tax consequences.
Recent U.S. Tax Court cases have taken the position that the taxpayer's indirect receipt of a profits interest in a lower-tier partnership qualified as a non-taxable event under the safe harbor provided in Rev. Proc. 93-27. However, this may not apply to all instances and the partnership structure is a pivotal component in the application of the profits interest safe harbor.
Profits interest arrangements have specific economic and tax implications and tax counsel must carefully consider these issues to effectively navigate any planning and compliance challenges that may arise.
Listen as our experienced panel offers a thorough and practical guide to planning considerations in partnership and LLC grants of profits interest as well as tactics for structuring compensation plans with profits interest and other incentives under current tax law.
Presented By
Mr. Klimpl is a seasoned attorney with experience providing ERISA advice and related services to a variety of plan sponsors and employee benefit plans, including corporate, nonprofit, multiemployer and governmental plans providing retirement, health, disability, dental and other welfare benefits. In the field of executive compensation, he has assisted both employers and employees with equity and incentive compensation, nonqualified deferred compensation, Section 409A questions, and executive employment and severance agreements. Among other industries, Mr. Klimpl has represented clients in the financial, construction, medical, fashion, real estate and legal industries. He chairs the Fairfield County Bar Association Employment Law Committee.
Ms. Reed's practice focuses on tax planning for private investment funds, including fund formation, structuring and internal organization, and investment activities. She also counsels clients who conduct secondary partnership transactions, including Strategic Partners and FlowStone Partners. In addition, Ms. Reed represents many types of investors with their investments in various private funds.
Mr. Teigman is a partner in the Tax Department and a member of the Employee Benefits & Executive Compensation Group. He focuses his practice on executive compensation and benefit matters, principally in connection with mergers and acquisitions, securities offerings and senior executive employment relationships.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Thursday, October 30, 2025
- schedule
1:00 p.m. ET./10:00 a.m. PT
I. Profits interest as compensation and alternatives for partnerships and LLCs
II. Recent U.S. Tax Court cases and Rev. Proc. 93-27
III. Planning considerations under current tax law
IV. Reporting and compliance challenges
V. Best practices in structuring equity compensation arrangements to avoid unfavorable tax treatment
The panel will review these and other key issues:
- Profits interest as equity compensation in partnerships and LLCs
- Available planning methods based on profits interest as compensation
- Tax treatment of profits interest and recent U.S. Tax Court decisions
- Best practices and critical considerations for profits interest grants in partnerships and LLCs
