SELLING YOUR INTEREST IN A PARTNERSHIP OR LLC -- TAX …

SELLING YOUR INTEREST IN A PARTNERSHIP OR LLC -- TAX ISSUES

CPA Academy

Joseph C. Mandarino

Cohen Pollock Merlin & Small, P.C. 3350 Riverwood Parkway, Suite 1600

Atlanta, Georgia 30339

jmandarino@

Overview

? Basics ? Optional Basis Adjustments ? Drafting Issues

Basics

? Sale of Partnership Interest ? General Rule ? "Hot Asset" Rule

? Purchaser Issues ? Liquidating Distributions (Redemptions) ? Net Investment Income Tax ? Application to

Transfers of Partnership Interests

Sale of Partnership Interest

? Sale of Entire Interest ? Sale of Partial Interest ? Split Holding Period Issues

Sale of Partnership Interest

? A partner can dispose of his or her interest in many ways: ? sale to third party ? sale back to partnership ? sale to other partner

? Economically, these transactions are identical, but the tax rules sometimes treat them differently.

? We first look at sales to third parties and/or other partners

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