This article is an outline of a lecture which we recently gave at a San Francisco tax conference. While to many of you the topic may seem old hat, we focused on the problems associated with using a limited partnership format with a limited liability entity such as an S corporation of an LLC as the general partner. We drilled into the allocation of debt rules under IRC 752 and the Anti-Avoidance rules applicable to tiered partnerships. Candidly, we don’t believe that there is a more comprehensive analysis of these issues anywhere. The use of tiered limited partnership entities with limited liability entity as the general partner has become popular due to the costs associated with the use of LLC’s in California. We think that this outline will serve as a useful guide for you.
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