Corpus

Upper Fund LP owns 80% of Lower Fund LP, which sold a portfolio company for $50M gain. Upper Fund's internal books showed $30M basis in its Lower Fund interest, but client sought to reconstruct basis from historical K-1s showing untracked Section 705(a)(1) income allocations and Section 752 liability allocations that could support materially higher basis and reduce gain on distribution.

Partnership holding appreciated warehouse ($12M FMV, $4M basis, $3M debt) with two 50% partners seeking divergent exit strategies: one partner wants cash, the other wants Section 1031 exchange. Partners had substantive price negotiations ($11.5-12.5M range) with potential buyer six weeks before contemplating distribution of property to partners as tenants-in-common, with written communications showing exit intent two months prior.

Private equity fund GP converted annual management fees to carried interest under partnership agreement provision allowing management company to annually elect fee waiver. GP reported waived fees ($2M annually) as long-term capital gain at 20% rather than ordinary compensation at 37%. Structure implemented by Big Four firm four years prior; partnership agreement contained 'may elect' language regarding annual fee waiver.

Partner selling 40% interest in fund management partnership for $50M upfront plus $30M EBITDA-based earnout. Partnership holds $15M in uncollected management fee receivables. Dispute centers on whether seller's $6M allocable share of Section 751(a) ordinary income must be recognized at closing or can be deferred to match earnout payments.

$500 million private equity fund with 40% foreign LP capital (European pension funds and Middle Eastern sovereign wealth) considered master-feeder structure with treaty-country blockers to reduce dividend withholding from 30% to 0-5%, but ultimately elected single Cayman feeder accepting statutory withholding rates due to substance and audit risk concerns around treaty limitation-on-benefits provisions.

Taxpayer formed FLP to hold eight commercial properties ($40M FMV, $15M debt, $3M annual NOI), contributed all assets individually, retained 2% GP interest with full management control, and gifted 98% LP interests to three children within same month as formation and funding, claiming 30% combined valuation discount.

Hedge fund management company restructured compensation from 2% management fee + 20% carry to 0.5% management fee + 25% carry with 6% hurdle and clawback. Fund invests in public securities with 18-month average holding periods, cleared hurdle 4 of last 5 years, GP maintains 3% capital commitment. Restructuring explicitly designed to convert ordinary fee income to capital gains treatment.

Family and co-investors held appreciated commercial property ($15M FMV, $4M basis) in partnership-taxed LLC. Majority partner sought to 1031 exchange into individually-owned replacement property while minority partners wanted cash liquidity. Partnership executed formal dissolution distributing property to majority partner and cash to minority partners, followed 60 days later by majority partner's individual Section 1031 exchange into pre-identified Dallas replacement property.

68-year-old donor contributed six apartment buildings ($30M value, $2M debt) to FLP, retained 1% GP and 30% LP interests, and gifted 69% LP interests to three adult children within three months. Partnership pays donor $200k annual guaranteed payment for management services and distributes remaining $1M NOI proportionally quarterly to all partners including children.

University endowment investing $50M in private credit fund generating UBTI through loan origination activities, sourcing fees from borrowers, and active credit servicing. Endowment uses wholly-owned Cayman blocker corporation as LP to avoid direct UBTI exposure, accepting 21% corporate tax drag versus potential trust-rate UBTI taxation.

Contributing partner transferred software IP with $50M claimed FMV and $5M basis to venture fund in exchange for 25% capital and 20% carry, creating $45M built-in gain. Partnership elected remedial allocation method under Treas. Reg. §1.704-3(d) to provide institutional LPs with offsetting ordinary deductions while allocating licensing income to contributing partner, avoiding ceiling rule distortions that would arise under traditional method.

Delaware general partnership with $180M in real estate assets and $140M nonrecourse debt converted to Delaware LLC via statutory conversion, maintaining identical ownership percentages (80% to 12 LPs, 20% to 2 GPs) and profit-sharing ratios. LPs held $8-10M built-in gains per unit from aggressive cost segregation depreciation.

Partnership holding appreciated commercial property ($8M basis, $25M FMV) with GP (30%) and three institutional LPs (70%) seeking divergent Section 1031 exchanges—GP targeting Denver multifamily, LPs targeting Phoenix industrial. Partnership executed swap-and-drop: exchanged into both properties, operated 18-24 months with preferential allocations giving each partner economic benefits tied to their preferred asset, then liquidating dissolution distributing properties along pre-negotiated lines.