The Metaphysical Dimension of Leveraged Partnership Buyouts and Disguised Sales

Tax attorney Mark Melton published an article in TAXES — The Tax Magazine exploring the nuances of tax treatment of leveraged buyouts in partnership sales. Mr. Melton explains that although leveraged buyouts themselves are commonplace in the mergers and acquisitions (M&A) market, the complexity of their tax implications for sales of partnerships can trip up even the savviest of buyers. His article provides a comprehensive overview of different structures for leveraged partnership transactions, including joint ventures and springing partnerships (the seller creates the partnership shortly before the transaction), as well as analyzes disguised sales rules and their application to different deal types. He also covers questions about tax basis issues, the minute note structure, timing and IRS audits.

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