Business Services Industry
Redemptions in conjunction with partnership mergers can create unexpected tax consequences.
Tax Adviser, The, September, 2007 by Staton, Kevin; Wagner, Howard
The IRS has provided a road map for partnership mergers or consolidations in Regs. Sec. 1.708-1(c).When two or more partnerships merge or consolidate into a single partnership, the resulting partnership is, for purposes of Sec. 708, considered a continuation of any partnership whose members retain an interest of more than 50% of the capital and profits of the resulting partnership. In a partnership merger in which some or all members of the terminated partnership receive cash for their interests, planning is necessary to prevent the continuing members of the partnership from recognizing gain on the transaction.
Mergers and Consolidations
The general rules cover a large majority of partnership mergers. In some cases the partnership that results from a...
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