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Crowell & Moring's tax practice provides advice on partnership formation and structuring. We regularly advise major corporations in connection with joint ventures and the use of partnerships, limited liability companies (LLCs), and disregarded entities in tax planning. We counsel funds and venture capital investors with regard to partnership taxation. We draft LLC and partnership agreements, analyze partnership allocations, and structure "profits interest" or "carried interest" arrangements. We are up to date concerning the new Centralized Partnership Audit Regime and familiar with the required amendments to partnership agreements under the new regime and the emerging audit issues. We are skilled at:

  • Amending partnership and limited liability agreements to conform to changes required under the new Centralized Partnership Audit Regime; advise on selection of Partnership Representative and draft the partnership’s agreement with the Personal Representative.
  • Representing clients in various industries, including government contracts, health care, financial services, and oil and gas, on formation of joint ventures, and provide counsel on issues such as section 704(c) allocation methods, contribution of intangible property licenses, and guaranteed payments.
  • Drafting LLC and partnership agreements with "safe harbor" and "targeted capital account" provisions.
  • Counseling on structuring and issuance of equity compensation (such as profits interests) by partnerships.

In addition, we have extensive experience defending partnership tax issues against IRS challenge, including the Tax Equity and Fiscal Responsibility Act (TEFRA) partnership issues and disguised sale transactions, and have handled numerous TEFRA partnership issues through audit and IRS Appeals.  

Representative Engagements

Partnership Controversies

  • Represented a Global 50 company on an IRS audit and before IRS Appeals in defending against IRS contentions that transfers of properties to partnership constituted disguised sales.
  • Represented a Fortune 200 company in the first and largest TEFRA audit Fast Track proceeding against an IRS audit assertion of disguised sale treatment with respect to interests in the partnership.
  • Represented a major power generator in a TEFRA proceeding regarding qualification of a facility for bonus depreciation
  • Represented a TEFRA partnership and its partners in Tax Court in connection with prepaid forward sale transaction, including litigation about the definition of partnership affected items.
  • Represented a number of large TEFRA partnerships (from 400 to 1200 partners) in Tax Court, before IRS Appeals, and in IRS audits involving options trading, foreign currency transactions, technology, coal mining, and livestock investments, and other issues.

Partnership Tax Planning

  • Represented a consortium of large financial institutions in the creation and structuring of a credit default swap clearinghouse structured as a partnership and analyzed deemed partnership issues.
  • Advised tax exempt and foreign investors in private equity and hedge funds on various tax consequences of their investments, including consequences of fee offset provisions and receipt of carried interests.
  • Represented hedge and private equity funds on formation issues, including preparation of private placement memoranda.
  • Advised a major agricultural firm on options for structuring real estate investments through master limited partnerships.

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Crowell & Moring LLP is an international law firm with more than 500 lawyers representing clients in litigation and arbitration, regulatory, and transactional matters. The firm is internationally recognized for its representation of Fortune 500 companies in high-stakes litigation, as well as its ongoing commitment to pro bono service and diversity. The firm has offices in Washington, DC, New York, Los Angeles, San Francisco, Orange County, London, and Brussels.

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