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Advanced Tax Strategies for LLCs and Partnerships
book

Advanced Tax Strategies for LLCs and Partnerships

by Larry Tunnell, Robert Ricketts
April 2018
Intermediate to advanced content levelIntermediate to advanced
224 pages
6h 2m
English
Wiley
Content preview from Advanced Tax Strategies for LLCs and Partnerships

Chapter 7SALE OF AN INTEREST IN A PARTNERSHIP OR LLC

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

     Determine the tax consequences associated with the sale of a partner's or member's interest in a partnership or LLC.

     Determine the amount of a partner's gain from sale of a partnership interest which must be recharacterized as ordinary income under Section 751(a).

     Recognize how using the installment method to account for the sale of a partnership interest will affect how the partner will report his or her gain on the sale.

     Recognize when the sale of an interest in a partnership will trigger a technical termination of the partnership.

     Determine the tax basis and holding period of assets owned by the partnership following a technical termination.

     Determine the tax consequences associated with subsequent dispositions of built-in gain or loss assets following a technical termination.

General Tax Consequences Associated With Sale

The general tax consequences of the sale of an interest in a partnership or an LLC are relatively straightforward. The general rule under Section 741 holds that the interest itself is a capital asset, much like stock in a corporation. Accordingly, under the general rule, the partner or LLC member will recognize a capital gain or loss in an amount equal to the difference between the amount realized on the sale and the basis in the interest. Determination of whether this gain ...

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Publisher Resources

ISBN: 9781119512394Purchase book