This advanced course examines the federal tax consequences of business dissolutions, ownership changes, and related restructuring transactions involving partnerships, S corporations, and closely held businesses. Using a cradle-to-grave framework, the program addresses planning, execution, valuation, reporting, and post-transaction compliance issues arising in sales, redemptions, liquidations, divorces, deaths, and internal restructurings. Participants will analyze inside and outside basis, debt basis, Section 754 adjustments, Section 302 redemption tests, Section 1041 transfers, F reorganizations, Section 751 hot assets, and the treatment of goodwill and other Section 197 intangibles. The course also incorporates practical guidance on NIIT, potential Section 1202 considerations, final-year return procedures, and selected state tax issues that commonly affect business exits and ownership transitions. This event may be a rebroadcast of a live event and the instructor will be available to answer your questions during the event.
Learning Objectives
After attending this presentation, you will be able to...
- Distinguish the tax treatment of business exits and ownership changes for partnerships, S corporations, and shareholders or partners at both the entity and owner levels.
- Calculate and reconcile inside basis, outside basis, and S corporation stock and debt basis in liquidation, sale, redemption, and restructuring contexts.
- Determine when partnership distributions and liquidations qualify for nonrecognition treatment and when gain or loss must be recognized.
- Analyze S corporation liquidations under Sections 336 and 331, including the effect of deemed asset sales and pass-through gain or loss.
- Identify and apply the Section 302 tests to determine whether a redemption receives sale or exchange treatment or dividend/distribution treatment.
- Analyze the impact of Section 751 hot assets, Section 754 elections, and basis step-up opportunities in transfers of partnership interests.
- Analyze the tax consequences of transfers incident to divorce under Section 1041 and identify limitations relating to suspended losses and carryover basis.
- Identify planning opportunities and limitations involving F reorganizations, Section 197 intangibles, and potential Section 1202 considerations.
- Determine whether gains from ownership changes or liquidations may be subject to Section 1411 net investment income tax.
- Identify key federal and state compliance steps in the final year of an entity’s existence or after a significant ownership transition, including final returns, dissolution filings, and related administrative requirements.
- Apply valuation principles relevant to closely held business interests, including discounts, buy-sell agreements, and Section 2703 considerations.
Major Topics
The major topics that will be covered in this course include:
- Planning the Exit or Ownership Change
- Choice of transaction structure
- Asset sale vs. equity sale vs. redemption vs. liquidation
- Buy-sell agreement design and valuation implications
- Core Basis Architecture
- Inside vs. outside basis
- Partnership liability allocations under Section 752
- S corporation stock basis and debt basis limitations
- Sales and Transfers of Ownership Interests
- Partnership interest sales and Section 751 hot assets
- S corporation stock sales
- Death, Section 1014 basis adjustments, and successor-owner issues
- Potential Section 1202 considerations where relevant
- Liquidations and Dissolutions
- Partnership liquidating distributions under Sections 731, 732, and 736
- S corporation liquidations under Sections 336 and 331
- Treatment of cash, property, liabilities, and built-in gain or loss
- Redemptions and Internal Ownership Shifts
- Section 302 tests
- Section 301 fallback treatment
- Cross-purchase vs. redemption economics and tax consequences
- Restructuring and Entity Modernization
- F reorganizations
- Pre-sale and post-sale restructuring considerations
- Basis and attribute preservation issues
- Special Situations
- Transfers incident to divorce under Section 1041
- Suspended losses and carryover basis issues
- Goodwill and Section 197 intangibles
- Family and related-party complications
- Ancillary Tax Consequences
- Section 1411 NIIT
- State tax nexus, trailing nexus, and dissolution-related state filings
- Transfer tax and valuation overlap where applicable
- Final-Year Reporting and Compliance
- Final Forms 1065 and 1120-S
- Form 966 and related dissolution filings
- EIN closure and administrative wrap-up
- Practical reporting checklists
- Valuation of Closely Held Interests
- Rev. Rul. 59-60 principles
- DLOM and minority discounts
- Section 2703 and buy-sell agreement enforceability for transfer tax purposes
