Reporting Full and Partial Redemptions of Partnership and LLC Interests
IRC 754 Elections, Section 736(b) Payments, Character and Timing of Gain, Installment Sales, and More
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Tax Preparer
- event Date
Tuesday, September 19, 2017
- schedule Time
1:00 PM E.T.
- timer Program Length
110 minutes
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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This course will provide tax advisers and compliance professionals with specific and practical guidance to navigating the tax rules that apply to the redemption of LLC or partnership interests. The panel will discuss both partial and complete redemptions, outline available elections, and identify common pitfalls and uncertainties in reporting a partnership buyout of a departing partner.
Redemption of a partner’s ownership interest, either total or partial, can create tax challenges for tax advisers to both the partner and the entity and can often have unanticipated tax consequences.
The structure of a full redemption of a partner’s full partnership interest in the partnership in exchange for a liquidating distribution can have significant implications for both the departing partner, and the remaining partners.
Redemption transactions receive different treatment than sales of partnership interests in application of the Section 751 “hot asset” rules and basis recovery in installment sale transactions. Additionally, the Section 754 election is available in a redemption transaction, but the election is made using the Section 734 rules instead of referring to Section 743.
When the partnership has debt, or when the redeeming partner has previously received a distribution financed by debt, the gain and loss calculations plus any required deferrals become more complex. Tax advisers must apply the rules to a partner’s specific circumstances to avoid costly tax mistakes.
Listen as our experienced panel provides a thorough and practical guide to the tax challenges of reporting partnership redemptions.
- Redemption transactions and Section 736(b) payments
- Treatment of Section 751 “hot assets” in redemption transactions
- Section 736(a) payments to general partners
- Installment sale treatment of partnership redemptions
- Liquidating distributions of property rather than cash
- Section 754 elections in effect or not in effect
- Stuffing allocations before redemption
- Disguised sale risks
The panel will discuss these and other important topics:
- How the Section 754 election rules function in a redemption as opposed to a sale
- Applying the Section 751 “hot asset” rules to the redeeming partner
- Differences in character of gain between redemption and other sale transactions
- Risk of technical termination and application of the disguised sale rules
- Filing requirements for a partnership engaged in a redemption on an installment basis
- How Section 736(b) applies to payments to the redeeming partner
- How distributions of partnership property including deemed distributions under Section 752 are treated
Learning Objectives
After completing this course, you will be able to:
- Recognize scenarios where redeeming a partner’s interest may create tax disadvantages to the remaining partners or the partnership
- Identify tax considerations in structuring redemption transactions with payment over multiple years
- Discern the difference in application of a Section 754 election to a redemption as opposed to a sale
- Determine the impact of the Section 736(b) rules on structuring payments to a redeeming partner
- 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.
Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
