WebMay 16, 2016 · Read about the applicable federal income tax rules in a nutshell. The same rules apply if your firm operates as an LLC that is treated as a partnership for federal tax purposes. The General Rule. When law firm partners or LLC members sell out, they generally have either a capital gain or loss under Section 741 of the Internal Revenue Code ... WebFeb 9, 2024 · In order to prevent retiring partners the opportunity to convert ordinary income to capital gain, however, IRC section 751 requires the selling partner to recognize ordinary income to the extent of any gain attributable to IRC section 751 property (or “hot assets”). Hot assets are defined to include unrealized receivables (e.g., rights to ... trial of the sea lion horde classic wow

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