The use of an umbrella partnership-C corporation (UP-C) structure is an increasingly common way for owners of a pass-through entity to engage in certain transactions, like raising capital in public markets or business combinations, while retaining the tax benefits of owning a pass-through entity or even recognizing added tax benefits.
UP-C transactions present certain unique accounting challenges, including how the Subchapter C corporation should account for the acquisition of the pass-through entity and for noncontrolling interests that might arise from the transaction, as well as how the transaction impacts the historical equity presentation, including earnings-per-share. While there are various legal and tax implications that an entity should consider before using an UP-C structure, this article from Grant Thornton LLP focuses only on the main accounting challenges arising from UP-C transactions.
Contact:
Graham Dyer
Partner, Accounting Principles Group, Grant Thornton LLP
Principal, Grant Thornton Advisors LLC
Graham Dyer serves as Grant Thornton LLP’s Chief Accountant. In this role, he leads the firm’s national Accounting Principles Group, which is responsible for Grant Thornton’s interpretation of accounting matters in both US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS).
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