CPE & Events Catalog
Don Farmer's Hot Assets & IRC 751: Avoiding Surprises on Partnership Sales VIRTUAL
Sales of partnership interests can trigger unexpected ordinary income when “hot assets” under IRC §751 are involved. Many practitioners focus on capital gain treatment under IRC §741, only to discover that unrealized receivables and inventory items require recharacterization of a portion of the gain as ordinary income.
This focused 2-hour program provides a practical and technical review of IRC §751 and its application to partnership interest sales and certain distributions. Participants will examine the definition of hot assets, the mechanics of ordinary income recharacterization, and the calculation of a partner’s share of unrealized receivables and inventory. The course also addresses common pitfalls, planning considerations, and documentation strategies to avoid costly surprises for clients.
Through examples and case-based discussion, attendees will gain clarity on how to identify §751 property, compute the ordinary income component of a sale, and properly report partnership interest transactions.
Learning Objectives
Upon completion of this program, participants will be able to:
1. Identify “hot assets” as defined under IRC §751, including unrealized receivables and inventory items.
2. Differentiate between capital gain treatment under IRC §741 and ordinary income recharacterization under IRC §751.
3. Calculate the ordinary income component arising from the sale or exchange of a partnership interest.
4. Determine reporting requirements and compliance considerations related to partnership sales involving §751 property.
5. Recognize common planning opportunities and traps associated with hot assets in partnership transactions.
Highlights
Sales of partnership interests can trigger unexpected ordinary income when “hot assets” under IRC §751 are involved. Many practitioners focus on capital gain treatment under IRC §741, only to discover that unrealized receivables and inventory items require recharacterization of a portion of the gain as ordinary income.
This focused 2-hour program provides a practical and technical review of IRC §751 and its application to partnership interest sales and certain distributions. Participants will examine the definition of hot assets, the mechanics of ordinary income recharacterization, and the calculation of a partner’s share of unrealized receivables and inventory. The course also addresses common pitfalls, planning considerations, and documentation strategies to avoid costly surprises for clients.
Through examples and case-based discussion, attendees will gain clarity on how to identify §751 property, compute the ordinary income component of a sale, and properly report partnership interest transactions.
Field of Study: Taxation
Who Should Attend
CPAs and tax practitioners in public practice and industry, tax professionals, and practitioners who advise partnerships or partners on ownership transfers, redemptions, or restructuring transactions.
Required Knowledge
None
