
Tax Planning for Partner Buyouts
Partner buyouts carry significant tax implications, making it crucial to structure payments and allocations carefully. IRS Section 736 governs how payments are taxed, with 736(a) treated as ordinary income and 736(b) as capital gains, while Section 754 elections can adjust asset basis for future tax benefits. Working with tax advisors to optimize payment terms, installment structures, and purchase price allocations can minimize liabilities and ensure compliance.










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