Tax Aspects of LLC Drafting: Target Allocations; Key Negotiated Tax Terms in JVAs; Top 10 Tax Mistakes When Drafting Agreements

This CLE/CPE course will provide tax counsel and advisers with the guidance necessary to correctly implement targeted partnership tax allocations. The panel will explain the complex requirements of IRC 704(b) and provide best practices for maximizing the tax benefits of targeting partnership allocations.

LLC agreement drafting is a must learn topic for many. A key aspect in drafting is the allocation section that includes two alternative approaches. Targeted partnership tax allocations are a popular choice for allocating income and loss among partners. Tax counsel and advisers must guide clients on whether this method will capture all allowed benefits or whether layer cake allocations should be utilized. For example, target allocation agreements may not satisfy regulatory safe harbors but can still meet the economic effect equivalence test or the partners' interest in the partnership test.

Listen as our experienced panel guides you through the LLC drafting process including determining how both targeted and layer cake allocation provisions are drafted and implemented.

The panel will also address certain key points of negotiation when drafting tax provisions in partnership agreements. For example, tax practitioners place particular emphasis on 704(c) methodology, discretion over tax elections and decisions, audit determinations and tax return preparation.

Lastly, the panel will discuss certain common tax mistakes practitioners make when drafting partnership agreements. Examples include improperly drafting tax boilerplate, omitting important tax provisions, neglecting to address tax return deadlines and review rights and failures in tax audit language.