Content area
Full text
Rev. Rul. 95-37
ISSUES
(1) Do the federal income tax consequences described in Rev. Rul. 84-52, 1984-1 C.B. 157, apply to the conversion of an interest in a domestic partnership into an interest in a domestic limited liability company (LLC) that is classified as a partnership for federal tax purposes?
(2) Does the taxable year of the converting domestic partnership close with respect to all the partners or with respect to any partner?
(3) Does the resulting domestic LLC need to obtain a new taxpayer identification number?
LAW AND ANALYSIS
In Rev. Rul. 84-52, a general partnership formed under the Uniform Partnership Act of State M proposed to convert to a limited partnership under the Uniform Limited Partnership Act of State M. Rev. Rul. 84-52 generally holds that (1) under Sec. 721 of the Internal Revenue Code, the conversion will not cause the partners to recognize gain or loss under Sec. 741 or 1001, (2) unless its business will not continue after the conversion, the partnership will not terminate under Sec. 708 because the conversion is not treated as a sale or exchange for purposes of Sec. 708, (3) if the partners' shares of partnership liabilities do not change, there will be no change in the adjusted basis of any partner's interest in the partnership, (4) if the partners' shares of partnership liabilities change and cause a deemed contribution of money to the partnership by a partner under Sec. 752(a), then the adjusted basis of such a partner's interest will be, increased under...