How buy-sell agreements can produce best tax results for both the partners and partnership

Article Abstract:

Tax considerations in formulating a buy-sell plan in partnerships involve two basic decisions: the choice of a cross-purchase or an entity-purchase approach. To avoid uncertain or disastrous results, the tax implications of the choice should be considered. With advance planning, the partners' objectives can be met. Issues considered are: tax planning for payments to a withdrawing partner, deferral of gain, allocation of capital and income payments, property in liquidation of an interest, concurrent partnership admission and withdrawal, estate taxation, funding, and tax planning.

Buy-sell agreements

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Terminating partnership can still make election to adjust basis of its assets

Article Abstract:

Revenue Ruling 86-73 provides terminating partnerships the ability to increase the basis of the partnership's assets, when the termination is the result of transfers of 50 percent or more of partnership interests. This ruling benefits the purchasing partners' tax position, due to the increase in basis for the partnership (rather than the individual partners). The Section 754 election to step up partnership basis and the alternative Section 732(d) election (available to partners individually) are examined and explained by example.

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Ordinary loss for limited partnership interest abandonment

Article Abstract:

The authors discuss the abandonment of partnership interests when liabilities are attached to those interests for purposes of obtaining ordinary loss deductions.

United States, Public Finance Activities, Tax Deductions & Exemptions, Partnerships, Laws, regulations and rules, Accounting and auditing, Tax deductions, Debt, Loss deductions, Abandonment of property, Abandonment (Law)

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