Читать книгу Taxation Essentials of LLCs and Partnerships - Larry Tunnell - Страница 22

L is a 50% partner in the LT Partnership. L's tax basis in his partnership interest was $200,000 when the partnership opted to be classified as a corporation and made the election to be taxed under subchapter S. (The partners hoped to reduce their self-employment tax liability by making this change in status.) To accomplish the conversion to a regular corporation, the partnership transferred all its assets to a newly formed corporation in exchange for stock. Assume that the partnership had no liabilities at the date of the conversion. The partnership then liquidated, distributing the newly acquired stock to its partners in liquidation of their interests in the partnership. L received stock with a tax basis to the partnership of $350,000 and a fair market value of $425,000 in liquidation of his interest in the LT Partnership. L will recognize no gain or loss on the transaction and will take a tax basis in his stock in the new corporation of $200,000.

In contrast, where the entity has been operating as a corporation, the election to change its status to a partnership is treated under the regulations as if the corporation first liquidates, distributing all its assets and liabilities to its shareholders, who then transfer these assets and liabilities to a new partnership (again requiring a new taxpayer identification number) in exchange for interests in the partnership. Because corporate liquidations are generally fully taxable to both the corporation and its shareholders,¹¹ the election to change status from a corporation to a partnership may have significant tax consequences.