Advanced Tax Strategies for LLCs and Partnerships

Chapter 1 1-1

Allocation of Partnership and LLC Income Under Section 704(b) 1-1

Economic effect: The general test 1-3

Deemed economic effect 1-12

Alternate test for economic effect 1-13

Substantiality 1-17

Denied allocations: Determining the partners’ or LLC members’ interests in the entity 1-22

Other issues 1-25

Allocation of deductions attributable to nonrecourse debt 1-30

Summary 1-35

Chapter 2 2-1

Allocations With Respect to Contributed Property: Section 704(c)(1)(A) 2-1

The traditional method 2-4

The traditional method with curative allocations 2-12

The remedial allocations method 2-15

Special rules 2-19

Summary 2-22

Chapter 3 3-1

Allocation of Partnership Recourse Liabilities Under Section 752 3-1

How liabilities affect partner tax consequences 3-2

Allocation of liabilities among the partners: In general 3-12

Allocation of recourse liabilities 3-15

Chapter 4 4-1

Allocation of Partnership Nonrecourse Liabilities and Related Deductions Under Sections 752 and 704(b) 4-1

Distinguishing between recourse and nonrecourse liabilities 4-2

Allocation of nonrecourse debts 4-7

Treatment of contingent liabilities 4-15

Chapter 5 5-1

Advanced Distribution Rules 5-1

Non-liquidating distributions generally 5-2

Distribution of multiple properties 5-7

Summary 5-18

Chapter 6 6-1

Adjustments to the Basis of Partnership or LLC Assets 6-1

Section 743: Adjustments following the transfer of a partnership interest 6-3

Distributions of partnership property 6-6

Allocating the adjustment amount among partnership properties 6-15

Chapter 7 7-1

Sale of an Interest in a Partnership or LLC 7-1

General tax consequences associated with sale 7-2

“Hot” assets and Section 751(a) 7-7

Collectibles and unrecaptured Section 1250 gain 7-12

Installment sales 7-14

Net investment income tax 7-16

Sale of an active (non-passive) interest in a partnership or LLC 7-17

Sale of a passive interest in a partnership or LLC 7-19

Purchaser of a partnership interest 7-20

Glossary Glossary 1

Index Index 1

Solutions Solutions 1

Chapter 1 Solutions 1

Chapter 2 Solutions 3

Chapter 3 Solutions 4

Chapter 4 Solutions 6

Chapter 5 Solutions 8

Chapter 6 Solutions 10

Chapter 7 Solutions 12