1031.Exchange INTELLIGENCE NETWORK
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OWNERSHIP & ENTITIES

Partnership interest

Also called: partnership units · LLC membership interest

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PLAIN-ENGLISH DEFINITION

An ownership interest in a partnership or entity taxed as a partnership.

What it means in practice.

An interest in a partnership is not the same thing as a direct interest in real property for Section 1031. Co-ownership arrangements and partnership restructurings need separate analysis.

Why it matters.

This is one of the most important distinctions for multi-member LLC and partnership-owned real estate.

Additional notes.

An interest in a partnership is not the same thing as a direct interest in real property for Section 1031. Co-ownership arrangements and partnership restructurings need separate analysis.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Ownership & EntitiesTenancy in commonA form of direct co-ownership in which each owner holds an undivided interest in property.Ownership & EntitiesDrop and swapIndustry slang for restructuring partnership-owned property into direct co-ownership before one or more owners pursue separate dispositions or exchanges.Ownership & EntitiesSwap and dropIndustry slang for completing an exchange and later distributing property interests from an entity to owners.
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