© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Taxation.

Slides:

Advertisements

Similar presentations

Slide 7-1 Assignments For next class: Problems: C4-33, C4-34, C4-35, C4-37, C4-38, C4-40, C4-41, C4-42.

Advertisements

Agenda BA128A-1 4/12 Return exams Go over exam Projects Review - Chapter C2 Assignment - C2-30,33,40 Additional - C2- 38,39.

Your Farm, Your Business Crystal Middleton, Esq. Presentation by: Crystal Middleton, Esq. Land Loss Prevention Project, SmartGrowth Business Center.

Chapter 1: What is a Partnership A partnership is an association between two or more persons who carry on a trade or business for profit as co-owners.

Chapter 20 Partnerships— Distributions, Sales and Exchanges ©2008 CCH. All Rights Reserved W. Peterson Ave. Chicago, IL

Taxation of Noncompensatory Partnership Options

LLCs in Iowa August 17, 2010 Des Moines, Iowa By Jason M. Stone, J.D., LL.M.

Corporate & Partner Tax Instructor: Dwight Drake Partnership Liability Allocations What’s at stake – A Reminder - Partner’s deductible losses can not exceed.

Copyright © Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P. All rights reserved. Profit and Loss Allocations, Distributions, and Other Key Tax.

10-1 ©2008 Prentice Hall, Inc ©2008 Prentice Hall, Inc. SPECIAL PARTNERSHIP ISSUES  Nonliquidating distributions  §751 assets  Terminating a.

MODULE 14. REAL ESTATE SYNDICATION What is a Syndication? w Organizational Form of Ownership w Types of Syndicate Offerings w Reasons for Syndication.

Corporate & Partner Tax Instructor: Dwight Drake Partnership Liquidation 731 & : No gain or loss recognized to partner unless: - Gain to extent.

Agenda 4/26 BA 128A Questions from lecture Hand in project

Corporate & Partner Tax Instructor: Dwight Drake Partnership Distribution Rules - Review 1. No gain or loss on non-liquidating distribution, except to.

When Partners Go Their Separate Ways: A Case Study

©2005 Prentice Hall, Inc. Sole Proprietorships and Flow-Through Entities Chapter 10.

Tax Implications of Entity Selection Andrew J. Malone, CPA Fesnak and Associates, LLP MACE Presentation January 16, 2014.

Chapter 9 Forming and Operating Partnerships Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Module 22 Operations of Flow- Through Entities. Menu (1) 1. Definition of a flow-through entity 2. Reporting the operations of a flow-through entity 3.

Chapter 10 Partnership Taxation Income Tax Fundamentals 2014 Student Slides Gerald E. Whittenburg Martha Altus-Buller Steven Gill 2014 Cengage Learning.

Problem Area 4 -Partner Basis  Partners initial basis is determine under Sec What is the general rule for determining basis?  Partner bases change.

Howard E. Abrams. Sell the partnership interest  Sections 741, 751(a), 743(b) Receive a liquidating distribution of cash  Sections 731, 751(b), 734(b)

McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 6 Chapter 6 Income and Allocation.

©The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin Chapter 15 Corporate Taxation “Corporations don’t pay taxes, they collect them.” -- Paul H. O’Neill.

C HAPTER 6: A LLOCATION OF P ARTNERSHIP I NCOME A MONG THE P ARTNERS : T HE S UBSTANTIAL E CONOMIC E FFECT R EQUIREMENT.

Chapter 12 Partnership Distributions

©2004 Prentice Hall, Inc. Sole Proprietorships and Flow-Through Entities Chapter 10.

Cash and Carried Interests: Protecting the Investor and Developer in a Real Estate Partnership Howard E. Abrams Of Counsel, Steptoe & Johnson LLP Professor,

Income Tax Fundamentals 2009 Gerald E. Whittenburg Martha Altus-Buller Student’s Copy Chapter 10 Partnership Taxation Cengage Learning.

If Section 351 Does Not Apply? Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com.

C HAPTER 1: T AX D EFINITION OF A P ARTNERSHIP. P ARTNERSHIP A partnership is an association between two or more persons who join to carry on a trade.

Corporate & Partner Tax Instructor: Dwight Drake Substantially Requirment Two ways to fail: 1. Shifting allocations: - Total tax liability of the partners.

12-1 Contributions to Corporations in Exchange for Stock Section 351 No gain/loss recognized on transfers of property to corporation in exchange solely.

Chapter 6: Allocation of Partnership Income Among the Partners: The Substantial Economic Effect Requirement.

Howard E. Abrams. Sell the partnership interest  Sections 741, 751(a), 743(b) Receive a liquidating distribution of cash  Sections 731, 751(b), 734(b)

Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

1 Chapter 9: Partnership Formation and Operation.

1 Chapter 9: Partnership Formation and Operation.

4-1 ©2008 Prentice Hall, Inc ©2008 Prentice Hall, Inc. NONLIQUIDATING DISTRIBUTIONS  Nonliquidating distributions in general  Earnings and profits.

Disguised Sales, Mixing-Bowls and Synthetic Installment Sales Howard E. Abrams

1 Chapter 10: Special Partnership Issues. 2 SPECIAL PARTNERSHIP ISSUES (1 of 2) n Nonliquidating distributions n §751 assets n Liquidating distributions.

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. Chapter 18: Structuring Real Estate Investments: Organizational.

©2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Chapter.

Chapter 16 Corporations. Learning Objectives Determine the types of entities that can be classified as a corporation for federal income tax purposes Calculate.

McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 15 Entities Overview © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale.

Chapter 14 Choice of Business Entity: Operations and Distributions © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated,

Problem Area 7 Partner’s Distributive Shares  Sec 704(a) - distributive share shall be determined by reference to the partnership agreement.  Sec. 704(b)

McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 11 Chapter 11 Dispositions of.

Howard E. Abrams Warren Distinguished Professor, USD School of Law

McGraw-Hill/Irwin Copyright (c) 2003 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 11 Dispositions of Equity Interests.

Tax Counsel’s Guide to Partnership Disguised Sales Rules: Structuring Transactions to Avoid Taxable Events By: Belan K. Wagner August 17, 2016.

Principles of Taxation: Advanced Strategies

Forming and Operating Partnerships

Warren Distinguished Professor University of San Diego School of Law

Forming and Operating Partnerships

©2009 Pearson Education, Inc. Publishing as Prentice Hall

Forming and Operating Partnerships

Principles of Taxation: Advanced Strategies

Chapter 10: Partnership formation & Operation

Chapter 12 Partnership Distributions

Chapter 8: Consolidated Tax Returns

©2010 Pearson Education, Inc. Publishing as Prentice Hall

©2008 Prentice Hall, Inc..

Chapter 10: Special Partnership Issues

CAPITAL ACCOUNTS 704(b) & MINIMUM GAIN

2017 Federal, State, Local and International Taxation Conference

Presentation transcript:

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Taxation of LLCs – an Overview

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. A Brief History of the LLC Before 1960 (limited liability meant corporate tax treatment) Kinter regulations (2 of 4) 1) Limited Liability 2) Centralized Management 3) Freely transferable ownership interests 4) Continuity of life

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. A Brief History of the LLC 1977 Wyoming LLC Version 1.0 Master Limited Partnerships Problem 1997 IRS changes course – who says there is no such thing as a free lunch? Check the Box

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Check the Box Single Member LLCs Partnership Corporation

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Self Employment Issues Self-employment tax 12.4% up to SS base ($113,700) plus 2.9% uncapped (with increase marginal rate to 3.8% in 2013) 1997 Proposed Regs for limited partners (500 hour test) New Obamacare passive activity income 3.8% marginal rate over income thresholds Increased incentive for active businesses to be S corps rather than LLCs

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Section 721 Transactions No gain or loss No 80% rule (unlike 351) Disguised Sale exceptions (i.e. watch out for distributions following contributions within 2 years)

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Partnership Allocations

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Capital Accounts Required maintaince Book Capital accounts Tax capital accounts (i.e. outside basis) Importance of examples

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Drafting Tax Allocation Provisions Pro rata generally not problematic. Substantial Economic Effect and other tax provisions: –Qualified Income Offset –Capital Accounts –Deficit Reduction Obligation –Minimum Gain (nonrecourse debt) –Contributed property & Bookups –754 adjustments Important not only to include “boilerplate” tax language but also to understand effects Safe Harbor vs. Targeted Allocation Drafting A trap for the unwary

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Dealing with Preferred Returns Profits are easy, losses are hard The basic test for substantial economic effect

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Substantial Economic Effect Capital Accounts Liquidating distributions in accordance with capital accounts Either a DRO, or Qualified Income Offset & Minimum Gain Chargeback Economic Equivalence Test (Dumb but Lucky)

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Qualified Income Offset Any Holder with a deficit in his/her capital account, as the result of unexpectedly receiving a distribution, must be allocated items of future income or gain in an amount sufficient to eliminate the deficit balance as quickly as possible. Shift Income/Gain to members with a deficit

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Minimum Gain Chargeback Requires that Holders who are allocated loss or depreciation deductions (i.e. nonrecourse deductions) with respect to an asset secured by nonrecourse financing must also be allocated the first gain from the sale of such asset, up to the amount of the prior deductions.

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Targeted Allocation Provisions First the economics Then allocation in manner to cause ending capital accounts to equal result in liquidation. Burden is transferred from drafter to tax return preparer Does not comply with safe b No certainty yet, but moving that way

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Profits Interest Tax consequences to recipient Tax consequences to company 409A issues

© 2006 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Conclusion Good luck out there!