ABA 2022 Fall Tax Meeting

Associate Andreas N. Andrews spoke at the American Bar Association’s (ABA’s) 2022 Fall Tax Meeting on the panel “Practical Advice for Business Divorces Involving Interest Holders Treated as Employees for Non-Tax Purposes,” where he discussed the implications surrounding the termination of partners from entities taxed as partnerships. The panel covered terminated partners who usually own small profits or capital interests—often nonvoting interests—in a company but act as employees.

Other topics included drafting an operating agreement to allow for termination of the partnership interest at the time of a partner’s voluntary or involuntary separation from the company, the timing of such termination when settlement of the buy/sell process is months after the partner’s separation from service, the pros and cons of building noncompete and nonsolicitation agreements into the operating agreement, and conflicts arising between the parties concerning treatment under 26 USC § 736.