Partnerships and Section 704(c)

• Overview
• CD & Manual Credit
• Podcast Credit
• OnDemand Credit

Overview
Many tax professionals and investors in partnerships, LLCs and other entities that are treated as partnerships struggle with the concepts and the operating rules that apply to Section 704(c). These rules potentially apply whenever property is contributed to such an entity or are distributed from such an entity. The regulations under Section 704(c) provide a very flexible but very complicated set of rules for required allocations that apply to contributions property to or distributions property from an entity that is treated as a partnership.

This OnDemand Webinar is designed to help the drafters of the basic operating documents for an entity treated as a partnership, including partnership agreements, operating agreements and trust agreements; the tax return preparers for such entities; and those who structure transactions using such entities, understand and work with the Section 704(c) regulations. There will be a discussion of the various elections that are available to adopt methods of allocation under Section 704(c), as well as a discussion of reverse allocations. Failing to have a proper understanding of these provisions can potentially result in unanticipated surprising tax consequences for partners, members and beneficiaries of partnership treated entities.

Authors
Leo N. Hitt, Reed Smith LLP

Self Study Credit - OnDemand Webinar

Self Study Credit - CD & Reference Manual

Self Study Credit - Podcast

Agenda

Section 704(c) - General Concepts

• Forward Allocations
• Reverse Allocations and Section 704(b)

Forward Allocations

• Book Value vs. Tax Basis Issue
• Methods of Allocation

- Traditional Method

- Curative Allocations

- Remedial Method

Reverse Allocations

• Section 704(b) Issue Upon Revaluation of Capital Accounts
• Aggregation Elections

Statutory Backstopping of Section 704(c)

• Section 704(c)(1)(B)
• Section 737