In the case of partnerships, it comes in the course of an operating task, such as the real division according to § 16 para. 3 EStG in principle, for a taxation of hidden reserves. Because in the real division usually lies the task of the co-entrepreneur share according to § 16 Abs. 1 No. 2, para 3 EStG. Nevertheless, there can be a tax-neutral book value continuation of the existing assets. However, several conditions must be met. One of the main focuses of the legislature, as is often the case with conversion operations or divestiture operations, is to ensure the taxation of hidden reserves.

A real division represents an operating task of a partnership, with subsequent use of the assets by the co-entrepreneurs in another operating assets.

However, while a taxable profit arises with the usual operating task, this is usually not the case with the real division. Because the legislator has the intention in the continuation of companies or. the further operational use of assets, to initially suspend taxation in order to ensure success neutrality. This is to avoid disproportionate taxation. Since there is no realization of income in a real share, which would lead to taxation, there is often a continuation of the book value of the transferred assets.

As already mentioned, this operation is a task of the business according to § 16 para. 3 sentence 1 EStG. As a result, all hidden reserves would be realised in the assets of the holding. However, the division of assets among the shareholders is another possibility. This also refers to an operating task, which, however, would in principle be realized at common values. However, if the shareholders now take over these assets in their respective operating assets, the taxation of the hidden reserves is ensured. As a result, the real division under continuation of the book values would be tax-neutral according to § 16(3) second sentence EStG.

It is assumed that at least one essential operating base continues to be the operating assets of a real divider. It is not necessary for each real divider to receive essential operating principles of the total handhold.

Professional advice on the real division of a partnership?

Now, in the real division, a distinction is made between a real division and a false division. If the company is dissolved and terminated and the existing assets are then distributed to the business assets of the co-entrepreneurs, there is a real real division. Because in this case the company is actually abandoned and the fact of the operational task is given.

In addition, the growth is also part of the real real division. A co-entrepreneur leaves the company through the transfer of a branch, a (partial) co-entrepreneur share in a subsidiary partnership or individual assets. The only remaining co-entrepreneur of the original two-part co-entrepreneurship continues the company as a sole proprietorship.

In addition, a false real division is also possible. Because a co-entrepreneur leaves a continuing company. However, he receives a severance payment from the company assets consisting of assets of the company assets, which the outgoing co-entrepreneur continues to use in another company assets.

In order to achieve a book value continuation of the transferred assets, two requirements apply in accordance with § 16 para. 3 S. 2 EStG. First, the transfer of branches, co-entrepreneur shares or individual assets to the respective operating assets of the outgoing co-entrepreneurs must take place. Secondly, the continuation of BW is only possible if the hidden reserves are taxed.

In order for taxable entrepreneurs not to abuse through the regulation of the real share, the legislature has introduced exceptions to the book value continuation. Some of these also apply retroactively and must therefore also be observed for further tax arrangements after the transfer of the assets.

For example, in the case of the sale or withdrawal of transferred essential operating bases within the 3-year blocking period according to § 16 para. 3 p. 3 EStG. However, this period begins only with the submission of the tax return for the period in which the real division took place. Accordingly, the common value would have to be applied retroactively for the original book value continuation and taxation would follow. Thus, this transaction would be tax retroactive effect according to § 175 para. 1 sentence 1 no. 2 AO.

In addition, a recognition of the transferred assets at the common value according to § 16 para. 4 EStG, if these are transferred to a corporation.

As well as the common value, if shares in a corporation are transferred in the course of the transfer of branches. It is important that these are transferred from a non-corporate taxpayer to a company taxpayer and that this company transfers the shares within seven years according to § 16 para. 3 S. 5 EStG sold.

If the book values of the branches taken over do not correspond to the book values of the co-contractors' capital accounts, the capital account adjustment method must be applied. This difference can arise from differently valuable economic goods in the co-entrepreneurship. The easiest way to solve this would be through the disquotal allocation of liquidity and debt. However, this option does not always arise, so that the capital accounts have to be adjusted tax-neutrally to the book values of the acquired branches. However, since unequal treatment is now present, the peak compensation is often not control-neutral.

Of particular importance is the taxation of the hidden reserves of economic goods in a real division. This is not the case, for example, if the assets are transferred to a foreign establishment. Thus, there is immediate taxation on transfer of these assets and a tax-neutral transfer is definitely excluded.

Special caution is required if all the essential operating bases are transferred to the private assets of a co-entrepreneur and insignificant operating bases in the other company of the co-entrepreneur are assigned to the operating assets. In this case, there is no tax-neutral real sharing.

Nevertheless, it is possible that assets assigned to the co-entrepreneurs are transferred to their private assets without affecting the division of real estate.

Finds a real division with book value continuation at a partnership with surplus income in accordance with § 4 para. 3 EStG without peak compensation, then according to the judgment of the BFH, exceptionally no real share balance is necessary. It should be noted that the income surplus determination is continued in the individual companies of the real dividers.

The treatment of loss carry forwards in the real division of a partnership is a particularly critical issue. If a shareholder has to show high loss carry forwards, it may be useful to uncover the hidden reserves in order to offset the loss carry forward with the hidden reserves discovered. Whether the loss carry forward can be used elsewhere is to be examined in individual cases. The treatment of loss carry forwards is also very exciting when converting a company.

In addition, it is necessary to check the proportional deduction of loss carry-forwards in the resulting operation in accordance with § 10a sentences 4 and 5 GewStG. Because it is often questionable whether this was really attributable to the company.

The payment of a peak or value settlement was permitted by the BMF on 19.12.2018 as part of the real share. A co-entrepreneur compensates the higher partial values of the received assets to the other co-entrepreneur(s) in the form of a cash payment.

Thus, the real division can be carried out without peak compensation and with peak compensation. In this case, a peak compensation leads to operating income of the beneficiary and to acquisition costs of the co-contractor liable for compensation.

Finally, the discovery of hidden reserves in a real sharing is the central question. This is because the transfer of assets and subsequent continuation of the operation do not result in a sale process and thus no inflow of funds that can be taxed. In this way, the legislature is particularly concerned to prevent any arrangements for the exclusive circumvention of taxation. Accordingly, situations can be assessed according to the extent to which the taxation right of the legislature is exercised by the transfer of assets from the shared operation into different operating assets or assets. Private assets are curtailed. We therefore pay particular attention to this.