SYLLABUS & COURSE MATERIALS FOR
LAW-T543
ADVANCED PARTNERSHIP TAXATION
SPRING 2012
University of Washington School of Law
Graduate Program in Taxation
Christopher Brown
Last updated: 3/14/2012
COURSE SYLLABUS
LAW T543
Spring 2012
Graduate Program in Taxation
Wednesdays, 4:00 pm to 6:00 pm (one 10-15 minute break)
Christopher Brown
(206) 676-7090
chrisb@SummitLaw.com
Course Description. This class is an in-depth analysis of various partnership tax issues in a seminar and
discussion format. In the first three Units, we will explore several of the recurring themes of partnership
tax, including different allocation methods, the treatment of liabilities, special drafting issues for
partnership agreements, and tax and financial reporting matters. Starting in Unit 4 (and depending on
headcount), students will pair up and take the lead in presenting a particular topic to the class. Thus, each
student will be expected to (i) prepare a memorandum (9 – 13 pages) that addresses the topic of a Unit;
(ii) lead the class in a discussion of the memorandum and topic; and (iii) analyze the discussion problems
associated with the Unit.
Special Additional Class. Assuming that everyone’s schedule can accommodate it, I would like to hold
Class #3 on either Friday, April 6th or Monday, April 9th. Class #3 will be a shorter class where we focus
on targeted allocations.
Required Texts. The following texts are REQUIRED for this course:
(1)
Cunningham & Cunningham, THE LOGIC OF SUBCHAPTER K: A CONCEPTUAL GUIDE TO THE
TAXATION OF PARTNERSHIPS (4d. Ed. 2006) (West).
(2)
These course materials (Syllabus, handouts, etc.).
(3)
Internal Revenue Code (CCH) (2 volumes).
(4)
Income Tax Regulations (CCH) (6 volumes).
Suggested Text. The following text is SUGGESTED for this course:
(1)
McKee, Nelson & Whitmire, FEDERAL TAXATION OF PARTNERSHIPS AND PARTNERS (RIA
CHECKPOINT)..
All of the foregoing texts except the course materials should be available at the University Bookstore,
across 15th Avenue from Gates Hall. (You should have items 1, 3 and 4 from the Taxation of Partners and
Partnerships (Course T511)).
Weekly Class Assignments/Discussions. Page four of these materials provides the course schedule. As
indicated on that page, we are scheduled to cover one “Unit” each week. Each Unit addresses one or
more specific partnership tax issue which will be the basis for that evening’s class and discussion.
Typically, the first portion of the class will involve a summary presentation regarding the Unit’s subject
matter. The remainder of the class will take the form of a group discussion regarding that Unit’s problem
and its solution. Where a student has prepared a memorandum on the topic, the student will present his or
her memorandum and will lead the class discussion regarding the Unit’s problem and solution.
Evaluation. Final grades will be based on two components:
2
(1)
Memo/Presentation/Problem (70%). Each student will prepare a written memorandum (9 – 13
pages) addressing a Unit topic and will lead a class discussion regarding the memorandum and
the topic. Each student will also lead the class in a discussion of the problem for the Unit. Each
class member will receive a copy of the student memorandum as part of the class discussion.
(2)
Participation in Class Analysis and Discussion (30%). Because of the seminar nature of the class,
each student must attend class regularly, read and understand the assigned materials, work
through the assigned problems, and actively participate in the discussion of the topic. Such
discussion should include questions and comments regarding the topic generally and the
presenting student’s law office memorandum.
Course Website. You can access the course website at this address:
https://courses.law.washington.edu/BrownC/T543ab_Sp12/
The website contains an electronic copy of these materials and copies of all handouts distributed in class.
Other items of interest may be posted on the website from time to time.
Office Hours & E-mail. You are welcome contact me by phone, e-mail or in person. Also, I will
generally be available for meetings with students 30-60 minutes before and after class.
Contact Information.
Christopher Brown
Summit Law Group, PLLC
315 Fifth Avenue South, Suite 1000
Seattle, Washington 98104-2682
chrisb@summitlaw.com
(206) 676-7090
Podcasting. No podcasting.
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TABLE OF CONTENTS AND COURSE SCHEDULE
March 28
Unit 1.
April 4th
Unit 2.
Big Picture Issues: What are the Fundamental Tax Benefits and Trade-Offs When
Operating in Partnership Form?
 Review and discuss Schwidetzky, “Integrating Subchapters K and S – Just
Do It!” 62 Tax Lawyer 749 (2009).
 Review Facts for Case Study of Section 704(b) Allocation Exercise.
 Review tax provisions in model LLC Agreement
Section 704(b) Case Study – Part I. Review the legal issues and economics of a
basic tax partnership using the 704(b) safe harbor, including the LLC Agreement,
tax accounting and drafting issues.
 Sections 702, 703, 704(b), 704(c).
 Percentage-based allocations.
 Flip-flopping allocations.
April 6th or 9th
(to be determined)
Unit 3.
Section 704(b) Case Study – Part II. Continuation of partnership tax example,
focusing on distributions and the use of targeted allocations.
 Basic economics of distributions
 Drafting a preferential return.
 Targeted allocations.
April 11th
Unit 4.
April 18th
Unit 5.
April 25th
Unit 6.
Compensatory transfers of partnership interests.
 Sections 721 and 83 – state of the law.
 Taxing the carried interest.
 Treatment of compensatory and non-compensatory options.
Sale versus “Redemption” (i.e., retirement) of a Partnership Interest
 Sections 741, 736, 751, 453.
 Installment sales.
 “Hot Assets” and capital gain considerations.
Disguised Sales and Mixing Bowl Transactions
 Sections 731 and 707
 Treatment of actual and deemed distributions
 Identifying guaranteed payments, qualifying for safe harbors
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May 2nd
Unit 7.
May 9th
Unit 8.
May 16th
Unit 9.
Section 704(c) Allocations – Advanced Issue
 What is “tax capital” and why do we care?
 Review of 704(c) methods
 Reverse 704(c) allocations
Transactional Issues – Partnerships and Corporations
 Incorporating a partnership; interplay with Section 351
 Newly incorporated partnerships and the use of Section 368
 Cash out fact patterns
 Partnerships used in S-Corp joint ventures
Transactional Issues – Partnership Mergers, Consolidations and Divisions
 Review of 708(b) termination rules.
 Partnership mergers and consolidations under 708(b)(2)(A); cash out
issues
 Division of a single partnership into multiple partnerships; cash-out issues
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