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acct 553 week 6 discussion

Accounting
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Are there any tax implications when converting an existing partnership to an LLC?

Aug 14th, 2014

So when converting a partnership to an llc there is or can be a lot of tax issues to resolve

no gain or loss is recognized, and converting doesn't stop it being taxed as a partnership because the irs doesn't recognize it as any kind of sale or exchange, the partners holding period doesn't end with the conversion but keeps going, if there's a lot of recourse liability then that can be taxed as a distribution to your partner, and before a conversion you get recourse debt but if during the conversion that lessens then after part or all of it can become taxable again. I hope that will help you and make sense if you would like I could recommend places to look to study about it. 

Aug 15th, 2014

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Aug 14th, 2014
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Aug 14th, 2014
Dec 9th, 2016
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