Depreciable Property Held by the Terminating Partnership
Issues arise when the depreciable property is being depreciated in the terminating partnership's hands using an erroneous method.
Term contracts can be terminated with notice periods of between one and three months, of the terminating
party continues to honour contractual obligations for the term duration or if the terminating
party indemnifies the other party in the amount not exceeding the equivalent of three month's gross wages.
In this instance, the beneficiary meant to make a QSST election but failed to do so, thus terminating the S election.
In a second terminating event, the trust that had made the QSST election failed to distribute all of its income.
The Service concluded that (1) the LLP would be an eligible S corporation, (2) the partnership agreement did not create a second class of stock terminating
the election and (3) the LLP could make a QSub election for the S corporation.
The ruling held that gain or loss from terminating
the swap is neither spread over the entire term of the debt instrument nor accounted for entirely in the termination year.
Employer filed Form 5310, Application for Determination for Terminating
Plan, and the IRS issued a favorable determination letter.
The company failed to distribute the stock, terminating
the S election.
Specifically, in an assets-over merger, a sale of an interest in the terminated partnership (T) to the resulting partnership (UP) is respected as a sale/purchase of the interest immediately before the merger, if the merger agreement (or similar document) specifies that the resulting partnership (UP) is purchasing the exiting partner's interest in the terminating
partnership (T) and the amount paid therefor.(47)
After the merger, .012% of the S corporation was owned by a C corporation, terminating
the S election.
Amending an ongoing plan, however, is quite different from terminating
a plan and resuming the payment of benefits under a new and different plan.
sale occurs within a consolidated group, S's gain on the sale of the partnership interest should be deferred under the intercompany transaction rules, as no partnership assets have been transferred outside the consolidated group.
The Service released proposed regulations on QSubs.(2) This article will review the mechanics of electing and working with QSubs, the consequences of terminating
QSub status, the tax opportunities and pitfalls of using QSubs and the tax advantages of using a QSub versus a single-member limited liability company (SMLLC), another type of disregarded entity.
First, none of the parties alleged the plan was financially impaired, and, second, the former employees did not allege that Sea Ray had improper profit motives in terminating