About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


82 Taxes 51 (2004)
Exploring the Implications of State Formless Conversions after Rev. Rul. 2004-59

handle is hein.journals/taxtm82 and id is 719 raw text is: Taxes/September 2004 Exploring the Implications of State Formless Conversions After Rev. Rul. 2004-59 A CCH Interview with Zion Levi Rev. Rul. 2004-59 has made switching from partnership to C corporation status considerably easier for taxpayers operating in jurisdictions with formless conversion statutes: Follow the formless conversion statute to make the change and certain tax consequences are now assured. Zion Levi sat down recently with CCH to discuss the implications of Rev. Rul. 2004-59 and formless conversions. CCH: In Rev. Rul. 2004-59,' the IRS held: If an unincorporated state law entity that is classified as a partnership for federal tax purposes converts into a state law corporation under a state law formless conversion statute, the following is deemed to oc- cur: the partnership contributes all its assets and liabilities to the corporation in exchange for stock in such corporation, and imme- diately thereafter, the partnership liquidates distributing the stock of the corporation to its partners. Why do you view this ruling as a significant ruling and what plan- ning implications do you see in it? Levi: The ruling is significant because it provides guidance to taxpayers with respect to the Federal income tax consequences following a State formless conver- sion. The resulting predictability of tax results should help taxpay- ers in their planning strategies. c2004 Z. Levi Before the issuance of the rul- ing, it was not clear how to treat, for federal income tax purposes, a state formless conversion of a partnership or a limited liabil- ity company that is treated as a partnership. Rev. Rul. 84-1112 discusses three different factual scenarios pursuant to which the assets and liabilities of a partner- ship are transferred to a newly formed corporation in exchange for all of its stock. It was not clear from Rev. Rul. 84-111, however, Zion Levi is Of Counsel at Powel Goldstein, Frazer 6- Murphy, LLP in Washington, D.C. Mr. Levi's practice encompasses all facets of federal income tax law, including taxation of dealings in real estate, taxation of transfer pricing and other international transactions, and taxation of consolidated groups. Mr. Levi has considerable experience in both tax planning and representation of taxpayers in controversies with IRS.