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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Law

Date & Time
  • event Date

    Thursday, August 29, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$347.00
CLE
CPE
ALL

This CLE/CPE webinar will provide tax professionals an in-depth analysis of the tax treatment of LLC liquidating distributions and key planning techniques for members and partners. The panel will discuss essential factors in determining the taxability of liquidating distributions of cash and property, exceptions to the general nonrecognition rules, the tax basis in property received in liquidation, the holding period for distributed assets, and other key issues regarding the taxation of LLC liquidating distributions.

Faculty

Robert S. Barnett
Partner
Capell Barnett Matalon & Schoenfeld, LLP

Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and partnership law and charitable planning.  His experience includes surrogate’s court practice, tax dispute resolution in both federal and state jurisdictions, and tax court representation.  Mr. Barnett frequently assists clients in structuring financial transactions and charitable gifts.  His articles and lectures encompass a wide variety of topics, including business succession, estate planning, generation-skipping, stock options, effective strategies for removing tax liens, proper utilization of the marital deduction and utilization of partnership elections.

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Emily M. Cummins
Senior Associate
Baker Tax Law, LLC

Ms. Cummins joins us from Proskauer where she was an associate in the firm’s tax department and a member of its private funds group. Her work centers on private investment funds and the tax concerns faced by both sponsors and investors in private equity funds. Ms. Cummins has helped to negotiate buy-side and sell-side secondaries transactions; planned and structured continuation funds and other sponsor-led liquidity events; and assisted sponsors with fund structuring concerns involving domestic and international investments. She was selected to be a Protégée for Proskauer’s Women Sponsorship Program, an initiative for high performing midlevel lawyers that champions emerging leaders. Ms. Cummins previously served as co-chair of the Firm’s LGBTQ Affinity Group, and received Proskauer’s Golden Gavel Award for excellence in pro bono work in 2021.

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John Harden
Senior Associate
Alston & Bird LLP

Mr. Harden is a senior associate in the Federal & International Tax Group. He has experience providing tax advice across a broad range of transactional matters for private equity clients as well as both public and private strategic clients. Mr. Harden's practice primarily focuses on domestic and cross-border M&A, joint venture, and private transactions, including mergers, auction bid processes, leveraged buyouts, and carve-outs. He represents private equity firms and their portfolio companies, venture capital firms, as well as venture-capital backed and founder- and family-owned businesses across numerous industries. Mr. Harden is recognized by The Best Lawyers in America© on its “Ones to Watch” list in the area of Tax Law.

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Description

The termination of LLCs classified as partnerships involves distributing all of the LLC's assets to its members in the liquidation of their interests. Tax professionals must identify potential tax implications of liquidating distributions and implement planning strategies to minimize adverse tax consequences.

Generally, current tax rules for distributions apply both to distributions that liquidate a member's interests upon termination of the LLC as well as those made with the LLC maintaining its existence. Depending on the manner and circumstances of the distribution, certain payments may be classified as Sec. 736(a) payments and treated as guaranteed payments or distributive shares of LLC income, while other liquidating distributions are taxed under Sections. 731 and 732. Section 736(a) has an important impact on professional partnerships.

Under Sec. 731(a), members of an LLC classified as a partnership for tax purposes do not recognize taxable gain or loss on a distribution unless the distribution exceeds their outside basis in the LLC interest. The same applies under Sec. 731(b) whereas the LLC does not recognize taxable gain or loss on distributions made to members. However, both provisions are subject to certain exceptions that tax professionals must understand along with the potential implications regarding tax basis under Sec. 732.

In addition, a number of other key issues must also be considered in order to minimize tax liability, such as understanding (1) a member's tax basis when property is received in liquidation; (2) the impact of depreciating property received in a liquidating distribution; (3) suspended losses when an LLC distributes assets to a member in a liquidating distribution; and (4) potential legal implications under state law.

Listen as our panel discusses key factors in determining the taxability of liquidating distributions of cash and property, exceptions to the general nonrecognition rules, the tax basis in property received in liquidation, the holding period for distributed assets, and other important issues regarding the taxation of LLC liquidating distributions.

Outline

  1. Tax rules applicable to liquidating distributions
  2. Navigating exceptions to the nonrecognition rules
  3. Tax issues for liquidating distributions of cash
  4. Tax challenges for liquidating distributions of property
  5. Determining tax basis
  6. Best practices for counsel and taxpayers to minimize tax liability

Benefits

The panel will discuss these and other key issues:

  • Tax treatment of the distribution to the LLC and any members
  • General nonrecognition rules and exceptions
  • Potential tax implications of liquidating distributions of cash and property
  • Determining tax basis
  • Impact of depreciating property received in a liquidating distribution
  • Best practices for counsel and taxpayers to minimize tax liability

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Understand the tax treatment of the distribution to the LLC and any members
  • Recognize issues stemming from the nonrecognition rules and exceptions
  • Identify tax implications of liquidating distributions of cash and property
  • Ascertain key factors in determining tax basis stemming from liquidating distributions

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge of partnership rules and operations; familiarity with passive income rules and concept of built-in gain.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).