708-1(d)(2)(i)(A), in defining the assets-over form when at least one resulting partnership is a continuing partnership, provides that the divided partnership contributes certain assets and liabilities to the recipient partnerships.
The divided partnership must be a resulting partnership that is a continuation of the prior partnership.
If the resulting partnership that, in form, transferred the assets and liabilities in connection with the division is a continuation of the prior partnership, it will be treated as the divided partnership.
CD is the continuing/ resulting partnership; thus, AB terminates.
The proposed regulations do not address whether a partnership resulting from a merger or division is bound by the accounting methods of a predecessor partnership.
708(b)(2)(A), which mandates a combination of two or more partnerships into one resulting partnership.
In particular, query whether the underlying current transaction may be recast as a division of AB, followed by mergers of the two deemed resulting partnerships into CD and EF, when both the division and the mergers are analyzed separately under Prop.
If the resulting partnership is not a continuation of any of the merging partnerships, the tax years of all merging partnerships close and the resulting partnership must adopt a tax year in accordance with Sec.
9) For example, if partners who owned a majority interest in the prior partnership acquire interests in each of the resulting partnerships, all of the resulting partnerships will be continuations of the prior partnership.
For example, if ABCD (owned by A, 20%, B, 30%, C, 30% and D, 20%) transferred a portion of its assets to a newly created partnership, Newco, and distributed Newco interests to partners B and C in partial liquidation of their ABCD interests, both ABCD and Newco would be resulting partnerships that are continuations of ABCD.
The Service held that the distribution of property to the partners and the contribution of that property to the resulting partnerships under the (imposed) assets-up form occur simultaneously.
22) In the case of a division using the assets-up form when there are no continuing partnerships, if the prior partnership does not liquidate under local law and, in form, retains certain assets and liabilities, it is deemed to transfer these assets and liabilities to a new resulting partnership under the assets-over form; see Prop.