When a taxpayer acquires a partnership, the purchaser will generally succeed to all federal income and non-income tax liabilities, all state income and franchise tax liabilities, sales and use tax liabilities, real and personal property taxes, federal and state employment taxes, and unclaimed property as well as to any specialty taxes, including excise taxes. The process will generally include the Target providing copies of tax returns and certain workpapers for the last three or 4 years. After reviewing the documents, we will have a call with the Target’s Management and Tax Advisors. We will then draft a report summarizing any exposures. Additionally, we will consider applicable transfer taxes. At any point at which we become of material exposures, we will communicate those to the Client, even if we lack data to quantify the issue. It should be noted that for federal purposes the partnership may make a push out election which makes the partners liable for historic federal income tax liability. 

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