Navigating State-Law Formalities and Tax-Law Forms of Partnership and LLC Reorganizations
16 Bus. Ent. 4, 2014
22 Pages Posted: 27 Aug 2014
Date Written: August 25, 2014
This article reviews general rules under state law that govern mergers and conversions of partnerships and LLCs. The laws governing such reorganizations can vary from state to state and from one act to another within any given state. For instance, the laws governing the reorganizations of LLCs may differ from the laws governing reorganizations of partnerships and limited partnerships. Nonetheless, the article demonstrates that some general principles apply across all forms of merger. In addition to navigating the state-law aspects of reorganizations, businesses and property owners must address the tax issues that such transactions raise. As the article describes, the form of the transaction can affect the holding periods and bases of property and partnership interests that are part of a reorganization. Tax planning with an understanding of the rules can help businesses and property owners avoid pitfalls that are present in the rules.
Keywords: Partnership, LLC, merger and divisions of partnerships, partnership consolidation, partnership merger, LLC consolidation, LLC merger, holding period, inside basis, outside basis
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