Why you should attend
Joint ventures between large companies or with start-up or other smaller companies are now an everyday occurrence. Partnerships have long been the tried and true format for the holding and operation of real estate, and since the 1981 Act, for the conduct of closely-held business operations as well. Further, the increase in the number of joint ventures to develop large-scale projects and innovative concepts, the rise of the limited liability company, the promulgation of the “check-the-box” regulations, and the use of hybrids that have fueled an explosion of tax planning opportunities have led many companies, both large and small, to focus on the partnership form or the LLC form for structuring subsidiary operations and foreign operations. More than ever before, corporate tax executives find they must advise senior management, and outside counsel find they must advise their clients, on the opportunities and pitfalls of structuring joint ventures and investments as partnerships or LLCs under Subchapter K of the Internal Revenue Code.
This three-day seminar will trace the partnership tax rules from the birth of the partnership through its operating life, with emphasis on tax issues and planning strategies and opportunities; and then, since for one reason or another such ventures frequently unwind either before or after satisfying their purpose, will focus on exit strategies and tax planning possibilities in unwinding. Some of the sessions on the first day are intended to serve as a review of basics. Special attention will be given to planning under recently finalized sets of regulations and proposed regulations, and to changes wrought by recent legislation and legislative proposals. Speakers from Treasury and the IRS will be joining a number of the more advanced panels in order to discuss cutting-edge issues. Finally, the entire afternoon of the third day will be committed to international joint venture tax planning including the use of hybrids and, therefore, is intended to be quite advanced.
What you will learn
Plus New Sessions:
- The benefits and detriments of choosing the partnership form
- Avoiding the partnership form for certain strategic alliances
- Partnership interest basis issues, including allocation of liabilities
- Determinations of partner distributive shares and the effect of liabilities
- Drafting partnership agreements for substantial economic effect
- Expanded session on non-compensatory partnership options, convertibles, recapitalizations, and similar transactions, including a government panelist
- Partnership and LLC compensatory interests including options, with a government panelist
- The application of self-employment tax and the new net investment income tax to LLC members and limited partners, including a government panelist
- Planning under Section 704(c)
- Formation of partnerships, including joint ventures of operating businesses
- “Topside” planning for private equity and hedge fund investments
- Transactions between the partnership and partners, including exit strategies
- Canal Corporation: Implications for structuring transactions
- Dispositions of partnership interests
- Partnership distributions and terminations
- Section 754 election planning and special basis adjustments
- Partnership mergers and divisions
- Special issues of tiered partnerships
- Economic substance - understanding the limits; effects of codification; other judicial doctrines; partnership anti-abuse rules; recent tax shelter cases; penalties; ethical considerations; distinguishing good from troublesome tax planning in today’s environment
- Partnership workouts and debt restructurings, including a government panelist
- Panel on interesting partnership transactions of the past year
- Session featuring IRS and Treasury representatives on the government perspective on key partnership issues
- Nuts and bolts of a partnership tax controversy
- International joint venture issues and planning, including a government panelist
- “Check-the-Box” planning
- Effects of recent or proposed tax legislation and pending regulatory proposals
- Advanced and cutting-edge topics in Subchapter K
- Disregarded entities: Entity/aggregate tension
- The umbrellas of Subchapter K
The faculty will consist of both inside and outside tax counsel with special expertise in the transactional aspects of structuring partnerships, joint ventures and other strategic alliances, both domestic and foreign. For some of the more advanced topics, the faculty will be joined by panelists from the IRS and Treasury. Many of the faculty have significant teaching experience and will adopt an approach designed to enable attendees to progress rapidly from an elementary understanding of the rules to the cutting-edge of the most complex of current transactional issues.
Who should attend
Day One: 8:30 a.m. - 6:00 p.m.
Morning Session: 8:30 a.m. - 12:00 p.m.
8:30 Partnership Interest Basis Issues Including Allocating Liabilities Among Partners
Relevance of basis in partnership interest; equality of inside and outside basis; Sections 705 and 752; partnership interest distinguished from partner’s capital account; effects of contributions; effects of liabilities; effects of Peracchi; effects of income and loss; effects of distributions; ordering and timing rules; allocation schemes for recourse and nonrecourse liabilities; bottom-dollar guarantees; capital account deficit restoration obligations; capital contribution obligations; final regulations for DREs; contingent liabilities and ”Son of Boss“ regulations; recent Notices.
Stephen L. Owen
9:30 Drafting Partnership Agreements for Substantial Economic Effect
Section 704(b); basic principles and relationship with Section 752; regulatory standards for allocations; substantial economic effect; deficit restoration obligations and other recourse assumptions; capital account maintenance; revaluations and book-ups; nonrecourse deductions and minimum gain attributable to nonrecourse liabilities; minimum gain chargebacks; partner nonrecourse debt; alternative test for economic effect; economic equivalence test; substantiality and related persons; PIP; ”targeted“ versus ”layercake“ allocations; at risk and deficit restoration agreement; regulations on ”non-tax basis liabilities“; removal of the de minimus rule; joint ventures with tax-exempt investors; Series LLCs; planning strategies.
Todd D. Golub, Karen Lohnes
10:45 Networking Break
11:00 Non-Compensatory Partnership Options, Convertibles, Recapitalizations and Similar Transactions
Taxability of issuance, exercise and lapse of non-compensatory partnership options; definition of option, including options, warrants and conversion features of debt or preferred equity instruments; Section 704(b) and Section 704(c) consequences; basis issues; distinguishing compensatory from non-compensatory transactions; Section 708 and Section 752 impacts; proposed and final (hopefully) regulations; planning opportunities and strategies.
Glenn E. Dance, Joy C. Spies [Senior Technician Reviewer, Office of the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service]
Attendees will help themselves to a picnic lunch and then take their seats in the meeting room.
Afternoon Session: 12:30 p.m. - 6:00 p.m.
12:30 Partnership and LLC Compensatory Interests Including Options
Capital interests; profits interests; restricted versus unrestricted, Section 83(b) election; options; warrants; equity appreciation rights; consequences to all parties; gray areas; recent IRS releases; proposed regulations dealing with service partners; new focus on earned interests and possible “carried interest” legislation; effects of recent statutory amendments, proposed, temporary and new final regulations; Sections 409A and 457A.
Julie A. Divola, Bahar A. Schippel, Clifford M. Warren [Special Counsel to the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service]
2:00 Implications of Section 704(c) for Negotiating a Partnership Agreement
Book/tax disparities; statutory framework; mechanics of Section 704(c) and reverse Section 704(c) allocations; final and proposed regulations; the traditional method; ceiling limitation principles; traditional method with curative allocations; remedial allocation method; other reasonable allocation methods; anti-abuse principles; Notice 2009-70; remedials and related parties; planning concepts.
Leslie H. Loffman, Andrea Macintosh Whiteway
3:00 Formation of Partnerships Including Joint Ventures of Operating Businesses
Treatment as partnership versus other arrangements; contributions of property, rights to use property and services; planning for transfers of intangibles under Section 197 in light of the final regulations, start-up costs, and deductibility of liabilities; contingent liabilities and trade or business exception to regulations; introduction to taxable transfers; partnership accounting methods, periods and issues; planning strategies.
Gregory W. Gallagher
4:00 Networking Break
4:15 “Topside” Planning for Private Equity and Hedge Fund Investments
Addressing topside planning for private equity and hedge fund investments, including the myriad passthrough, cross-border and other issues involved, including UBTI, ECI, FIRPTA, sovereign investors (Section 892), and exit planning.
David H. Schnabel, Eric B. Sloan, Lewis R. Steinberg
5:15 The Application of Self-Employment Tax and the New Net Investment Tax to LLC Members and Limited Partners
Current state of the law on the application of the self-employment tax to LLC members and limited partners; impact of the new Medicare tax on net investment income, planning opportunities.
C. Wells Hall, III, David H. Kirk [Attorney, Office of the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service]
Day Two : 8:30 a.m. - 6:00 p.m.
Morning Session: 8:30 a.m. - 11:45 a.m.
8:30 Transactions Between Partner and Partnership - Sections 707, 704(c)(1)(B) and 737
Planning examples; statutory framework; payments to a partner other than in capacity as a partner; disguised sales; exit strategy planning techniques; theory of Section 707(a)(2) regulations; nonsimultaneous transfers; mixing bowl transactions; entrepreneurial risk situations; TimesMirror/Chandler I and II; introduction to leveraged partnerships; Arco/Arch Coal; Tribune/Newsday/Comcast and others; contributions of encumbered property; withdrawal of proposed regulations on disguised sales of partnership interests; Section 737; combined impact of Section 737, Section 704(c)(1)(B), the disguised sale regulations, and the Section 1.701-2 anti-abuse rules; recent IRS Notices, FSAs and CCAs, possible new regulations.
Louis S. Freeman
9:30 Canal Corporation: Implications for Structuring Transactions
In Canal, the Tax Court not only rejected a transaction structure that many practitioners thought should work, it also imposed penalties notwithstanding the receipt by the taxpayer of an opinion from a Big 4 accounting firm. Practitioners need to consider the impact of Canal on their planning, as well as the advice they give to clients concerning penalties. This panel will address how Canal should be considered in tax planning and providing tax opinions.
Robert J. Crnkovich, Richard M. Lipton, Clifford M. Warren [Special Counsel to the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service]
10:15 Networking Break
10:30 Sale, Exchange or Other Disposition of Partnership Interests; Partnership Distributions; Partnership Termination
Sections 741 and 751; unrealized receivables; inventory items; effect of liabilities; current distributions; distributions in complete liquidation of partner interest; post-distribution consequences to distributee; distributions involving partnership ordinary income property; partnership terminations and consequences; the Section 708 termination regulations, including planning strategies; planning to avoid termination.
Stephen D. Rose
Attendees will help themselves to a picnic lunch and then take their seats in the meeting room.
Afternoon Session: 12:15 p.m. - 6:00 p.m.
12:15 Interesting Partnership Transactions of the Past Year
Linda E. Carlisle, Jasper L. Cummings, Jr., R. David Wheat
1:45 Adjustments to the Basis of Partnership Assets (Sections 734, 743 and 754) Including Effects of 2004 Jobs Act Amendments
Transfer of partnership interest; distribution of partnership assets; distribution to transferee-partner; effect of Section 1060; effect of Section 197 and the final regulations; planning opportunities and techniques involving making or not making the Section 754 election; final regulations under Section 755; effects of 2004 Jobs Act amendments, including mandatory adjustments for built-in losses.
Stuart L. Rosow, Dean S. Shulman
2:45 Partnership Mergers and Divisions
Final regulations; forms of partnership mergers; Assets-Over Form; Assets-Up Form; Interest-Over Form; effects under Section 752; buyout of a partner; merger or division as part of a larger transaction; forms of divisions; consequences under Sections 704(c)(1)(B) and 737.
Blake D. Rubin
3:45 Networking Break
4:00 Hot Topics in Partnership Taxation: The Government Perspective
Recent and pending developments in partnership taxation featuring present and recently “retired” Treasury and IRS representatives.
Curtis G. Wilson [Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service], Clifford M. Warren [Special Counsel to the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service], Craig A. Gerson [Attorney Advisor (Office of Tax Legislative Counsel), Department of the Treasury], Jennifer H. Alexander [Former Attorney Advisor (Office of Tax Legislative Counsel), Department of the Treasury], Pamela F. Olson
5:00 Advanced and Cutting-Edge Topics in Subchapter K
This session will examine a range of issues arising in current transactional planning involving passthroughs, including intentionally taxable transactions, contingent liability structuring, and other cutting-edge strategies.
Eric B. Sloan
Day Three: 8:30 a.m. - 5:00 p.m.
Morning Session: 8:30 a.m. - 12:15 p.m.
8:30 Disregarded Entities: Entity/Aggregate Tension
This session will review recent developments in the tax treatment of disregarded entities in different contexts, and identify the themes and principlesthat lead to sometimes consistent, and sometimes inconsistent, results.
Stephen L. Gordon
9:15 Special Issues of Tiered Partnerships
Effects of tiering on Section 704(b) allocations, allocation of liabilities, mergers, Section 704(c) allocations, disposition of Section 704(c) property, special basis adjustments and other representative effects of tiered partnerships.
Jennifer A. Bennett, Arielle S. Krause
10:00 Networking Break
10:15 The Umbrellas of Subchapter K
An overview of the use of umbrella partnerships for UPREIT, UP-C and UP-PTP structures, including discussion of key features of such structures, terms of tax receivable agreements and tax protection agreements and tax issues raised by such structures and agreements.
John C. Hart, David F. Levy
11:15 Economic Substance - Understanding the Limits; Effects of Codification; Other Judicial Doctrines; Partnership Anti-Abuse Rules, Tax Shelters, Recent Tax Shelter Cases, Ethical Considerations - Distinguishing Good Tax Planning from Aggressive Tax
Advice and Criminal Tax Evasion
The impact on partnership and other transactions of recent judicial decisions, legislation, and administrative developments relating to economic substance and tax shelters and the codification of the economic substance doctrine, including the 2011 LB&I Directive; laying the groundwork for penalty defenses; Circular 230 and related ethical considerations that come into play in evaluating the difference between good tax planning and overly aggressive or even criminal tax advice.
Richard M. Lipton, Michael J. Desmond
Attendees will help themselves to a picnic lunch and then take their seats in the meeting room.
Afternoon Session: 12:45 p.m. - 5:00 p.m.
12:45 The Troubled Partnership - Workouts and Debt Restructurings
Distressed partnerships and the effect of debt modifications, debt workouts, and partnership bankruptcy proceedings on partners and creditors. Debt modification and amount and timing of cancellation of indebtedness (COD) income; differences between discharge/workouts of recourse and non-recourse indebtedness; effect of COD income recognized by a disregarded entity; allocation of COD income; strategies to mitigate the effects of COD income; disappearing debt in partnership transactions; passive activity and at-risk implications; Rev. Proc. 2009-37; partner-level deductions for worthlessness and abandonment; timing of losses for lenders; final regulations under Section 108(e)(8).
David F. Levy, Richard M. Lipton, James B. Sowell, Beverly M. Katz [Special Counsel to the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service]
2:00 Nuts and Bolts of a Partnership Tax Controversy
How to handle an IRS controversy involving a TEFRA partnership, including alternative ways to approach a resolution during theexamination, in Appeals and in litigation, with a focus on the particular challenges and opportunities for TEFRA partnerships.
Loretta R. Richard, B. John Williams, Jr.
3:00 International Joint Venture Issues - Outbound and Inbound General Joint Venture Tax Issues
General review of benefits/detriments in using U.S. or foreign tax partnership vs. corporate structure in outbound/inbound joint ventures; formation, operation and termination of joint venture; foreign tax credit; tax treaty and Subpart F and withholding tax issues; problems with intangible property and multi-country joint ventures, including Section 894(c), final regulations under Section 894, foreign partnership reporting rules; effects of 2004 Jobs Act amendments.
Current planning techniques and issues under “Check-the-Box” regulations, including collateral consequences (e.g., branch accounting for foreign currency under Section 987, U.S. withholding tax regulations, conversion issues and Rev. Ruls. 99-5 and 99-6, and impact on treaty entitlements); harmonization of foreign tax planning with these rules; planning opportunities with hybrids, check and sell issues.
Joan C. Arnold, Peter H. Blessing, Eric B. Sensenbrenner, Steven M. Surdell, John J. Merrick [Special Counsel to the Associate Chief Counsel (International), Internal Revenue Service]
3:45 Networking Break
4:00 International Joint Venture Issues - Outbound and Inbound General Joint Venture Tax Issues (continued)
“Check-the-Box” Planning (continued)
Clifford M. Warren
~ Special Counsel to the Associate Chief Counsel (Passthroughs and Special Industries), Internal Revenue Service
Jennifer H. Alexander
~ Former Attorney Advisor (Office of Tax Legislative Counsel) Department of the Treasury, Deloitte Tax LLP
Craig A. Gerson
~ Attorney Advisor, Office of Tax Legislative Counsel, U.S. Department of the Treasury
Beverly M. Katz
~ Special Counsel to the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service
David H. Kirk
~ Attorney; Office of the Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service
John J. Merrick
~ Special Counsel to the Associate Chief Counsel (International), Internal Revenue Service
Joy C. Spies
~ Senior Technician Reviewer, Office of Associate Chief Counsel (Passthroughs & Special Industries), Internal Revenue Service
Lewis R. Steinberg
~ Managing Director, Head of Strategic Advisory (Investment Banking Department), Credit Suisse Securities (USA) LLC
Curtis G. Wilson
~ Associate Chief Counsel (Passthroughs and Special Industries), Internal Revenue Service
Chicago Seminar Location
Skadden, Arps, Slate, Meagher & Flom LLP, 155 N. Wacker Drive, Suite 2700, Chicago, Illinois 60606. (312) 422-3980.
Chicago Hotel Accommodations
Allegro Hotel, 171 West Randolph Street, Chicago, Illinois. (312) 325-7211. When calling, please mention Practising Law Institute. The cut-off date for the preferred rate is March 27, 2013.
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