The preferred partnership is used to obtain both an income tax-free step-up in basis at death for the preferred partnership interest included in the decedent's gross estate and an estate freeze by disposing of the common partnership interest that is allocated the appreciation in the value of the partnership's assets. The step-up in basis at death is especially attractive for encumbered real estate with negative capital accounts since it can eliminate the potential for having to report the phantom capital gains without a transfer tax cost.
This session first describes how to structure the partnership so that the decedent owns the preferred partnership interest at death and how to transfer the common interest that is allocated the appreciation in value to a grantor trust.
SPEAKERS
- Jerome M. Hesch, Meltzer Lippe Goldstein & Breitstone LLP, Boca Raton, FL
PRODUCED
Session from 23rd Annual North Carolina Tax Section Workshop, May 24–26, 2024
APPROVED CREDIT
North Carolina: 1.00 MCLE Hour
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