Tax effects of the acquisition of a partnership interest can be controlled
Article Abstract:
Three common methods for acquiring partnership interests (contribution, purchase, and performance of services for the partnership) are examined to determine the advantages and tax consequences of each. Strategies are discussed to keep undesirable tax consequences to a minimum. Purchasing a partnership interest allows adjustment to basis and the termination of a partnership. In acquisition by contribution, no gain or loss is recognized to the partnership, form versus substance arguments with the IRS become more possible, and related allocations become important. With the acquisition of interest for services, the effect on taxation is dependent on the type of partnership interest, and the value of the partner's ownership rights.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1986
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Reorganization instead of liquidation may accomplish same result with much less tax
Article Abstract:
The Tax Reform Act of 1986 requires corporations to recognize gains or losses on sales of assets in a liquidation. The recognition of gain can be avoided when property is transferred as part of a reorganization, and some distributions of property during a reorganization are exempt from the gain recognition rules. Liquidation rules have been preempted by corporate reorganization rules. The tax treatment of transferor corporations and shareholders of target corporations is described. Special transitional rules for qualified small corporations are discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1987
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