Corpus

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.

$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.

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.