Partnership Exchanges Under Current Tax Law: Structuring "Drop and Swap" and "Mixing Bowl" Transactions
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Tax Law
- event Date
Thursday, May 16, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
This CLE/CPE course will provide tax advisers with knowledge and tools to advise partnership clients converting to a tenancy-in-common form of real estate ownership. Tax advisers may recommend such a conversion in contemplating a future sale of property or creating a master limited liability company for various commonly owned real estate entities to allow partners to go their separate ways.
Ms. Flavin is a member of the New York and Connecticut Bars, and has been practicing real estate law since 1992. She has been specializing in 1031 exchanges with IPX since 1999. In her position as Northeast Regional Manager of Investment Property Exchange Services, Ms. Flavin frequently lectures and writes articles on IRC § 1031 tax deferred exchanges. She teaches Continuing Legal Education and Continuing Professional Education to Attorneys and CPA’s. Ms. Flavin is an adjunct professor at the University of New Haven where she teaches Business Law. She received her B.A. from St. John’s University and her J.D. from St. John’s School of Law in 1992.
Professor Borden’s research, scholarship, and teaching focus on taxation of real property transactions and flow-through entities (including tax partnerships, REITs, and REMICs). He teaches Federal Income Taxation, Partnership Taxation, Taxation of Real Estate Transactions, and Unincorporated Business Organizations, and he is affiliated with the Dennis J. Block Center for the Study of International Business Law. His work on flow-through and transactional tax theory appears in articles published in law reviews including Baylor Law Review, University of Cincinnati Law Review, Florida Law Review, Georgia Law Review, Houston Law Review, Iowa Law Review, Tax Lawyer, and Virginia Tax Review, among others. His articles also frequently appear in leading national tax journals including Journal of Taxation, Journal of Taxation of Investments, Real Estate Taxation, and Tax Notes.
The "drop and swap" technique can be implemented to validate an exchange by former partners of undivided interests in real estate previously owned in partnership form. This process also comes with substantial complexities and risks. The structure must comply with rigid IRS 1031 rules for tenancies in common.
"Mixing bowl" structures potentially allow partners to separate their interests in multiple real estate entities on a tax-deferred basis by first consolidating commonly owned entities into a master limited liability company and subsequently liquidating that company.
Tax counsel must prepare for significant complexities when implementing a mixing bowl structure, including the disguised sale and anti-mixing bowl provisions of the Internal Revenue Code.
Listen as our experienced panel carefully reviews the drop and swap and mixing bowl techniques for purposes of tax-free or tax-deferred partnership asset exchanges. The panelists will examine best practices in structuring these transactions to maximize IRS recognition of the desired tax treatment and minimize challenges.
- Overview of Section 1031 partnership asset exchanges
- The use of Section 1031 under current tax law
- Drop and swap transaction
- Mixing bowl transaction
The panel will review these and other priority issues:
- What are the requirements of IRC Section 1031 on partnership asset exchanges?
- How does tax reform impact the use of Section 1031 for certain assets?
- How must you implement the drop and swap transaction to maximize 1031 treatment on the property exchanged?
- How can the mixing bowl technique allow partners to separate their real estate holdings in commonly owned entities without triggering immediate tax?
Learning Objectives
After completing this course, you will be able to:
- Identify tools to advise partnership clients looking to convert from a partnership to a tenancy-in-common form of ownership or to create a master LLC to allow partners to separate
- Recognize sophisticated planning techniques involved with drop and swap and mixing bowl transactions applicable to both partnerships and LLCs
- Discern the requirements of IRC Section 1031 and the IRS' strict requirements for tenancy-in-common ownership of rental real estate
- Distinguish restrictions on mixing bowl transactions, including the disguised sale and anti-mixing bowl provisions
- 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 income tax forms and schedules for partnerships and pass throughs; supervisory authority over other preparers/accountants. Knowledge and understanding of partnership structures, dissolution and related taxation; Familiarity with sale and redemption of a departing partners interest, characterizing gain and loss determined upon a transfer, and the 1031 Like-Kind Exchange rules
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.
Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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