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Larry Tunnell. Advanced Tax Strategies for LLCs and Partnerships
Table of Contents
Guide
Pages
ADVANCED TAX STRATEGIES FOR LLCS AND PARTNERSHIPS
Chapter 1. Allocation of Partnership and LLC Income Under Section 704(b) Learning objectives
Introduction
Economic effect: The general test. General requirements
Maintenance of capital accounts
Knowledge check
Partnership agreement: Maintenance of capital accounts
Section x.x. capital accounts
Section 704(B) versus GAAP
Example 1-1
Example 1-2
Treatment of liabilities
Example 1-3
Liquidating distributions
Example 1-4
Knowledge check
Restoration of deficit capital balances
Partnership agreement: Liquidating distributions and restoration of negative capital account balances
Deemed economic effect
Alternate test for economic effect. Rationale
Requirements
Qualified income offset: Correcting inadvertent errors
Partnership agreement: Qualified income offset
Section x.x. Special provisions
Partial economic effect
Example 1-5
Adjusted capital accounts
Substantiality. Overview
Shifting tax consequences
Example 1-6
Transitory allocations
Transitory allocations versus shifting tax consequences
Example 1-7
Example 1-8
Knowledge check
Overall tax effects test
Knowledge check
Denied allocations: Determining the partners’ or LLC members’ interests in the entity. In general
No deficit restoration requirement
Example 1-9
Knowledge check
Other issues. Distributions of partnership property
Example 1-10
Section 734(B) adjustments
Example 1-11
Example 1-12
Transfers of partnership interests
Optional revaluation of partnership property
Partnership agreement: Adjustment of capital accounts
Determining fair market value
Allocation of deductions attributable to nonrecourse debt. Overview
Knowledge check
Nonrecourse deduction defined
Example 1-13
General requirements for economic effect
Consistency with other significant items
Minimum gain chargeback
Partnership agreement: Allocation of nonrecourse deductions
Summary
Notes
Chapter 2. Allocations With Respect to Contributed Property: Section 704(c)(1)(A) Learning objectives
Introduction
Example 2-1
Knowledge check
The traditional method
Allocations of tax gain or loss
Example 2-2
Knowledge check
Cost recovery deductions
Example 2-3
Knowledge check
Example 2-4
Depreciation methods
Example 2-5
Knowledge check
Anti-abuse provision
The ceiling rule
Example 2-6
Example 2-7
Knowledge check
Nontaxable dispositions
Example 2-8
Example 2-9
The traditional method with curative allocations
Example 2-10
Example 2-11
The remedial allocations method
Mechanics
Example 2-12
Example 2-13
Computation of book items
Example 2-14
Special rules. Section 704(B) revaluations
Example 2-15
Small disparities
Aggregation of properties
Tiered partnerships
Summary
Notes
Chapter 3. Allocation of Partnership Recourse Liabilities Under Section 752. Learning objectives
How liabilities affect partner tax consequences. Basic concepts
Transactions that change partners’ shares of partnership liabilities
Contribution of encumbered property
Example 3-1
Example 3-2
Knowledge check
Example 3-3
Admission of new partners or payment of partnership debt
Example 3-4
Knowledge check
Distributions in partial liquidation of a partner’s interest
Example 3-5
Example 3-6
Distributions of encumbered property
Example 3-7
Effect of liabilities on partners’ and LLC members’ amounts at risk
Knowledge check
Allocation of liabilities among the partners: In general
Recourse versus nonrecourse liabilities
Recourse liability defined
Allocation of recourse liabilities. General rules: “Constructive liquidation”
Example 3-8
Knowledge check
Limited partners
Book versus tax capital accounts
Example 3-9
Effect of partner guarantees
Guarantees of recourse debt
Example 3-10
Guarantees of nonrecourse debt
Knowledge check
Example 3-11
Arrangements tantamount to a guarantee
Loans by a partner or related person
Special allocations of partnership income and loss
Knowledge check
Example 3-12
Example 3-13
Notes
Chapter 4. Allocation of Partnership Nonrecourse Liabilities and Related Deductions Under Sections 752 and 704(b) Learning objectives
Distinguishing between recourse and nonrecourse liabilities
Obligation to make payment
Partner guarantee of interest on nonrecourse loan
Example 4-1
Knowledge check
Partner providing collateral for a partnership nonrecourse loan
Knowledge check
Nonrecourse loans by partners
Example 4-2
“Wrapped” debt
Example 4-3
De minimis exceptions
Knowledge check
Allocation of nonrecourse debts. Conceptual difficulties in allocating nonrecourse liabilities
Nonrecourse liabilities allocated by reference to partners’ profits interests
Minimum gain
Example 4-4
Example 4-5
Book versus Sec. 704(c) minimum gain
Example 4-6
Other partnership profits
Knowledge check
Example 4-7
Knowledge check
Alternative approach to allocation of portion of nonrecourse liabilities in excess of minimum gain
Example 4-8
Treatment of contingent liabilities. General
Mechanics
Example 4-9
Sale or transfer of interest in partnership or LLC
Example 4-10
Liquidating distribution to a Section 1.752-7 partner or distribution of property secured by a Section 1.752-7 liability to another partner
Example 4-11
Exceptions
Notes
Chapter 5. Advanced Distribution Rules. Learning objectives
Non-liquidating distributions generally. Non-cash distributions
Example 5-1
Knowledge check
Example 5-2
Knowledge check
Cash distributions
Example 5-3
Example 5-4
Receipt of cash and property
Example 5-5
Example 5-6
Knowledge check
Distribution of multiple properties
Example 5-7
Example 5-8
Decrease in basis of unrealized receivables and/or inventory
Example 5-9
Example 5-10
Decrease in basis of other assets
Example 5-11
Knowledge check
Liquidating distributions
Example 5-12
Knowledge check
Allocating an increase in basis among multiple properties: Ordinary versus “other” assets
Example 5-13
Allocating an increase in basis among multiple “other” assets
Example 5-14
Example 5-15
Summary
Notes
Chapter 6. Adjustments to the Basis of Partnership or LLC Assets. Learning objectives
Introduction
Section 743: Adjustments following the transfer of a partnership interest
Example 6-1
Example 6-2
Knowledge check
Distributions of partnership property
Gain recognized by distributee partner
Example 6-3
Loss recognized by distributee partner upon distribution of partnership property
Example 6-4
Increase or decrease in basis of assets distributed in complete liquidation of a partner’s interest
Example 6-5
Knowledge check
Decrease in basis of partnership assets distributed in partial liquidation of a partner’s interest
Example 6-6
Knowledge check
Allocating the adjustment amount among partnership properties
Transfers of partnership interests
Allocation between classes of property
Example 6-7
Allocation of adjustment among assets within each class of property
Example 6-8
Knowledge check
Example 6-9
Income in respect of a decedent
Partnership goodwill
Distributions of partnership property
Knowledge check
Gain or loss recognized
Example 6-10
Proposed regulations: Increases in basis of Section 1245 property
Change in basis of distributed assets
Example 6-11
Knowledge check
Section 751(B) distributions
Making the Section 754 election
Relief when election not made
Knowledge check
Notes
Chapter 7. Sale of an Interest in a Partnership or LLC. Learning objectives
General tax consequences associated with sale
Example 7-1
Effect of liabilities
Example 7-2
Receipt of property other than cash
Example 7-3
Knowledge check
Holding period of partnership interest
Example 7-4
Knowledge check
Example 7-5
“Hot” assets and Section 751(a) “Hot” assets under Section 751(a)
Unrealized receivables
Inventory items
Rules of application
Example 7-6
Example 7-7
Knowledge check
Statement must be attached to return
Collectibles and unrecaptured Section 1250 gain
Collectibles gain
Example 7-8
Unrecaptured Section 1250 gain
Installment sales
Example 7-9
Net investment income tax
Sale of an active (non-passive) interest in a partnership or LLC
Example 7-10
Sale of a passive interest in a partnership or LLC
Example 7-11
Purchaser of a partnership interest
Example 7-12
Potential withholding obligation of purchasing partner
Notes
Tax Glossary
Index
ADVANCED TAX STRATEGIES FOR LLCS AND PARTNERSHIPS
Solutions. Chapter 1. Knowledge check solutions
Chapter 2. Knowledge check solutions
Chapter 3. Knowledge check solutions
Chapter 4. Knowledge check solutions
Chapter 5. Knowledge check solutions
Chapter 6. Knowledge check solutions
Chapter 7. Knowledge check solutions
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