Corporate Roundtable Discussion

Host: Sam Tutko, EA

Date: April 26, 2024

Location: Farragut Office-12802 Kingston Pike, Ste 102
Knoxville, TN 37934 US

This wll be a 45 minute discussion with a 15 minute Q&A to follow. Donuts and coffee will be served!

Reviewing buy-sell agreements for partnerships is crucial for effective tax planning and ensuring the smooth operation of the business. These agreements outline the terms and conditions under which partners can buy or sell their interests in the partnership. Here’s why they are important for tax planning:

Section 754 Election:

– A buy-sell agreement can include provisions that trigger a Section 754 election under the Internal Revenue Code. This election allows the partnership to adjust the basis of its assets in response to the sale or exchange of partnership interests, potentially reducing tax liabilities.

Capital Gains Planning:

– Properly structured buy-sell agreements can help partners plan for capital gains taxes. By establishing favorable terms for certain transactions, partners may be able to minimize the tax impact of buying or selling their interests.

In summary, reviewing buy-sell agreements for partnerships is essential for effective tax planning and overall business continuity. These agreements provide clarity on ownership changes, valuation methods, and funding mechanisms, all of which have significant implications for tax purposes. Working with legal and tax professionals to ensure these agreements are well-crafted is crucial for the long-term success of the partnership.