Clarifying entity classification conversions

Two recent IRS rulings on the tax treatment of converting single-member limited liability companies into partnerships and vice versa likely will affect the commercial real estate industry because many transactions take place with partnerships and other entities with flow-through tax characteristics, including LLCs and single-member LLCs. The rulings are Rev. Rul. 99-5, which addresses the federal tax consequences of converting a single-member domestic LLC to a partnership, and Rev. Rul. 99-6, which addresses converting an LLC from a partnership to a single-member LLC.