Liquidation of Flow-Through Entities for LLCs and Partnerships (LFTE)

Overview

Part of the technical competence of most experienced tax practitioners is the ability to advise owners of S corporations and partnerships or multiple-member LLCs treated as partnerships regarding the tax rules that apply when these entities liquidate. Entity liquidations do not occur every day; but they do occur, and often at very critical times in the business life of the entity and its owners. All tax practitioners should be able to advise their clients about the tax issues associated with client businesses that go out of existence and liquidate. This program explains the tax consequences associated with liquidating S corporations, partnerships, and multiple-member limited liability companies treated as partnerships.

Major Topics:

• Tax rules governing liquidation of a partnership or S corporation
• Tax treatment of the shareholder/partner/member receiving a liquidating distribution in an S corporation liquidation/partnership liquidation
• Tax impact on the pass-through entity when the entity is liquidated
• Receipt of corporate liabilities in an S corporation distribution
• Proportionate, liquidating partnership distributions to partners, and gains and losses to a partner on a liquidating partnership distribution
• Tax issues associated with a partnership distribution of noncash properties in a liquidation
• Compliance requirements on the occasion of a liquidation of a corporation or a partnership

Learning Objectives:

• Determine the gain or loss to the entity and to the owners when it makes a liquidating distribution
• Determine the basis of property distributed in a liquidating distribution to an owner of the entity
• Know what to do in terms of IRS reporting when an entity liquidates