WebCredenza 2025 LLC, partnership and pass-through mergers, part 2

As LLCs and other pass-through entities have become the default choices of entity in most business, commercial, and real estate transactions, many mergers or asset sales now involve two or more pass-through entities. The familiar principles that apply to corporate mergers or asset sales do not translate to pass-through transactions. Rather, combinations of LLCs, limited partnerships, partnerships, and even S corporations are governed by a nonintuitive jumble of rules that treat the transaction one way for business law purposes and quite another for tax purposes. Indeed, for income tax purposes, transactions following a variety of patterns are “deemed” to consist of a series of property contributions and distributions and taxed accordingly. Planning for both aspects is a very complex challenge. This program provides you with a practical guide to planning both the business law and tax law aspects of merging pass-through entities.

Part 1:

• Framework of nontax and tax law for combining pass-through entities, partnerships, LLCs, limited partnerships, and S corporations.
• How transactions are treated for state law purposes vs. tax law purposes.
• Tradeoffs between assets vs. membership interests/S corporation stock deals.
• Nontax benefits of “entity” deals—contract assignments, licensing and registration transfers.
• Successor liability issues in “asset” deals and how to mitigate risk.
• Special considerations involving S corporation mergers—triggering hidden taxes, losing S corporation eligibility, structuring restrictions.
• Benefits of treating stock transactions as asset sales under IRC 338(h)(10).

Part 2:

• Structural alternatives for combining LLCs and partnerships.
• Special tax issues for mergers involving LLCs and partnerships, including entity and member-level treatment.
• Treatment of distribution, voting, and other rights when membership interests/S corporation stock are transferred.
• Due diligence considerations of merging pass-through entities.
• State and local sales tax issues on transfer of assets in the merger.
• Incentive compensation issues.

Opinions and positions stated by presenters of MoBarCLE programs are those of the presenters and not necessarily those of The Missouri Bar. This program is intended as information for lawyers in Missouri, in conjunction with other research they deem necessary, in the exercise of their independent judgment.