October 27, 2026

Webcast

2 CPE Credits

Don Farmer's Hot Assets & IRC 751: Avoiding Surprises on Partnership Sales

October 27, 2026
Webcast
2 CPE Credits

Don Farmer's Hot Assets & IRC 751: Avoiding Surprises on Partnership Sales

  • View Bio

    Instructor

    Nick
    Preusch

    View Bio

    Nick Preusch

    Bio

    Nick Preusch's, CPA, JD, LLM, primary focus is performing tax services for high wealth individuals and mid-to-large business entities. His responsibilities include tax research related to complex business transactions and tax return preparation and review. Nick also works closely with businesses to find tax efficiencies through ever-changing tax legislation.

    Nick is an IRS attorney at the IRS National Office in Washington, DC, where he was the lead attorney for several significant tax ethics cases. He is a licensed attorney in New York and a certified public accountant in Virginia. Nick earned an LLM in Taxation from Georgetown University, a JD from Case Western Reserve University, and an MS in Accounting from the University of Connecticut.

Sales of partnership interests can trigger unexpected ordinary income when “hot assets” under IRC §751 are involved. Many practitioners focus on capital gain treatment under IRC §741, only to discover that unrealized receivables and inventory items require recharacterization of a portion of the gain as ordinary income.

This focused 2-hour program provides a practical and technical review of IRC §751 and its application to partnership interest sales and certain distributions. Participants will examine the definition of hot assets, the mechanics of ordinary income recharacterization, and the calculation of a partner’s share of unrealized receivables and inventory. The course also addresses common pitfalls, planning considerations, and documentation strategies to avoid costly surprises for clients.

Through examples and case-based discussion, participants will practice identifying §751 property, computing the ordinary income component of a sale, and properly reporting partnership interest transactions.

Learning Objectives

1. Identify “hot assets” as defined under IRC §751, including unrealized receivables and inventory items

2. Differentiate between capital gain treatment under IRC §741 and ordinary income recharacterization under IRC §751

3. Calculate the ordinary income component arising from the sale or exchange of a partnership interest

4. Determine reporting requirements and compliance considerations related to partnership sales involving §751 property

5. Identify common planning opportunities and traps associated with hot assets in partnership transactions

Major Topics

  • Overview of Partnership Interest Sales
  • Definition and Scope of Hot Assets (IRC §751)
  • Mechanics of §751 Recharacterization
  • Distributions and §751(b)
  • Reporting and Compliance Considerations
  • Planning Considerations and Risk Management

CPE Credits Available

2 CPE Credits
2
Taxes

Things to Know About This Course

Course Level

  • Intermediate

Professional Area of Focus

  • Tax

Prerequisites

Working knowledge of partnership taxation (Subchapter K), including inside and outside basis concepts.

Advanced Preparation

None

Intended Audience

CPAs and tax practitioners in public practice and industry who advise partnerships or partners on ownership transfers, redemptions, or restructuring transactions.

Provider

Don Farmer Tax Education

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