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The use of entities classified as partnerships for federal income tax purposes (“partnerships”) has become more and more common in today’s business world. Many tax practitioners are familiar with the federal income tax consequences related to the merger of two or more corporations under subchapter C of the Internal Revenue Code. However, there are important tax considerations when merging two or more partnerships of which tax practitioners must now also be aware.

 

Two forms of partnership mergers are recognized under the Treasury regulations. The “assets-over” form and the “assets-up” form. While taxpayers have the flexibility to structure a partnership merger as either an “assets-over” or “assets-up” merger, the form chosen may have significant tax consequences to the partnership and its partners. The form of merger chosen will impact the determination of the tax basis of partnership assets, the potential recapture of certain tax credits, and the application of Section 704(c) and Section 737 (regarding the treatment of certain property contributed to a partnership by a partner) to the transaction. It is important to understand the differences between these two forms in order to be able to best plan for a partnership merger.

 

Wednesday, November 14, the CBA Business Tax Committee will have J. Troy Terakedis discuss partnership mergers and the tax issues which should be considered when structuring these transactions. We hope you can join us at this meeting to learn more about this topic which comprises part of the 2007 Taxing Matters Series. Lunch may be purchased prior to the seminar from 11:45 – 12:15 on a first come, first served basis. No food may be consumed during CLE from 12:15 – 1:15 for 1.0 hours of CLE credit. You may audit the course, but only those registered to attend my receive CLE credit. Register online here or by phone at 614/221.4112 for event #3718-3. The cost is $30 prepaid/$35 day of for members, $45 prepaid/$50 day of for non-members and $20 prepaid/$25 day of for paralegals.