Prevent errors and penalties and gain a better understanding of Section 704(c) provisions.
Many tax professionals and investors in partnerships, LLCs and other entities treated as partnerships struggle with the concepts and the operating rules that apply to Section 704(c).
These rules potentially apply whenever property is contributed to such an entity or are distributed from such an entity. The regulations under Section 704(c) provide a very flexible but very complicated set of rules for required allocations that apply to contributions property or to distributions property from an entity that is treated as a partnership.
This topic is designed to help the drafters of the basic operating documents for an entity treated as a partnership, including partnership agreements, operating agreements and trust agreements; the tax return preparers for such entities; and those who structure transactions using such entities, understand and work with the Section 704(c) regulations.
There are various elections that are available to adopt methods of allocation under Section 704(c), as well as information on reverse allocations. Failing to have a proper understanding of these provisions can potentially result in unanticipated surprising tax consequences for partners, members and beneficiaries of partnership treated entities.
Learning Objectives:
- You will be able to define general concepts of Section 704(c).
- You will be able to describe forward allocations.
- You will be able to discuss reverse allocations.
- You will be able to explain statutory backstopping of Section 704(c)
Section 704(c) – General Concepts
• Forward Allocations
• Reverse Allocations and Section 704(b)
Forward Allocations
• Book Value vs. Tax Basis Issue
• Methods of Allocation
◦ Traditional Method
◦ Curative Allocations
◦ Remedial Method
Reverse Allocations
• Section 704(b) Issue Upon Revaluation of Capital Accounts
• Aggregation Elections
Statutory Backstopping of Section 704(c)
• Section 704(c)(1)(B)
• Section 737
Credit Information (Sponsored by Lorman Education Services):
- CLE
- CPE
- AIPB
- NASBA
- Enrolled Agents
For Detailed Credit Information page
click here
Only registered attendee will receive continuing education credit.
Faculty
Leo N. Hitt, Reed Smith LLP
- Partner in the Pittsburgh office of Reed Smith LLP
- Member of its tax practice and former head of the Tax, Benefits and Wealth Planning Group
- Practice emphasizes all aspects of federal income taxation, with particular emphasis in the taxation of business entities, such as partnerships and corporations, securitized and other investment vehicles, including RICs, REITs and REMICs
- Conducts seminars and workshops on numerous topics for a large number of professional groups, including lawyers, accountants and business people
- Wrote several publications related to the areas of the federal income taxation of business entities and other related topics
- Adjunct professor at the University of Pittsburgh School of Law
- Listed in Best Lawyers in America for tax law for more than 10 years and achieved the highest rating by Martindale-Hubbell Law Directory
- Board of the Pittsburgh Tax Club and member of the Allegheny Tax Society
- J.D. degree, University of Pittsburgh School of Law; LL.M. degree, New York University School of Law; B.A. degree, University of Pittsburgh
- Can be contacted at lhitt@reedsmith.com or 412-288-3298
(Not available outside the US)