Use this button to switch between dark and light mode.

Disguised Sales in Partnership Transactions

August 09, 2022

A disguised sale occurs when a partner intentionally "contributes" property with a built-in gain to a partnership and immediately, or shortly thereafter, receives a related "distribution." While a contribution and distribution would normally be tax-free for the partner and the partnership, in some situations the transaction may be “collapsed” and treated as taxable to avoid the intentional evasion of tax.

Read now »

Related Content 

  • Advanced Taxation Issues for Partnerships and LLCs
    See how a partnership's capital accounts reflect the financial relationships among the partners, which is the current status of the business and the economic deal agreed to by the partners, as incorporated in the partnership agreement. A partner's basis in its partnership interest is the partner's “outside basis.” The partnership's basis in its assets is the “inside basis.”

Legal Developments

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

  • Tax Key Legal Developments Tracker (Federal)
    Stay informed on new developments: 
    • Employment. IRS rules that where Multiemployer Defined Benefit Plan (MDP) 1 that received special financial assistance (SFA) from the Pension Benefit Guaranty Corporation (PBGC) and was certified as being in critical status for year it merged with MDP 2, which had not received SFA, in the same year, and where MDP 2 was designated as the ongoing plan post-merger, the ongoing plan was not deemed to be in critical status per R.C. § 432(b)(7)solely as a result of the merger. Rev. Rul. 2022-13, 2022 IRB LEXIS 290.
  • Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts
  • Check out the new Practical Guidance Author Center! Learn about the 1500+ leading attorney authors contributing to our 21 practice areas, and find out how you can Become a Practical Guidance Author.
  • Share fundamental guidance with your firm’s summer associates to help them sharpen their research and writing skills, get the inside scoop on summer associate survival, and hit the ground running in the tax practice area. Review the resources in the Summer Associate Resource Kit: Tax.
  • The Practical Guidance Journal Summer 2022 Edition features guidance on wage and hour issues related to remote and hybrid work.
  • Listen up! Practical Guidance Podcast: NFTs: Copyright Infringement, Regulation, and Regulation Podcast. Hear from Holland & Knight’s Daniel Barsky as he discusses NFTs (non-fungible tokens) which have become all the rage. From a recent copyright lawsuit over Quentin Tarantino's NFT of unreleased Pulp Fiction materials, to the micro-investment possibilities in Banksy’s artwork, NFTs are in the news and do not appear to be going away. 


Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+

Tags: