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    Missing partner

    Where would you start?

    One year a partnership had 3 partners. One 80%/two 10%. One of the 10% partners had a guaranteed payment and in addition took a $6000 distribution creating a negative capital account for him. The other two partners had positive capital accounts.

    The next year there were two partners One 90%/one 10%. Nothing official was done, just one partner left the area.

    I've been reading about retiring partners, but no payment was made to buy out the one that left.

    What happens to the captial account? All that's left in it is the remaining value of assets. Can I just split it up accordingly?
    JG

    #2
    Not Much Info

    JG, here goes, I don't have much info, but had talked about a similar situation with another preparer a few years back. No distributions or buyouts, partner just vanished, etc.

    The question that arose, is do you continue to keep the "missing partner" on the books and issue a K-1 to the last know address or have the partner abandon his interest and split evenly among the remaining partners. I never heard the final outcome. In your case 10% interest isn't much, altho needs to be accounted for.

    Is this a new client for you and you don't have the prior years information??? What does the partnership agreement state for a "retired, abandoned, missing, deceased" partner?

    Did you read anything about the abandonment , here is a link http://www.irs.gov/businesses/partne...696,00.html#29

    I will try to find more later, but maybe raising this post to the top will have someone else post as well.

    Keep us posted

    Sandy

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      #3
      Thanks for the link.

      No, just a verbal partnership agreement. I'll study some more also, thanks for the help!
      JG
      JG

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        #4
        Originally posted by JG EA
        The next year there were two partners One 90%/one 10%. Nothing official was done, just one partner left the area.
        The ownership question appears to have been answered as 90%+10%=100%, therefore the 3rd partner capital account is now owned by the 90% partner and should be merged. When he assumed his 10% ownership portion he also assumed his negative capital account which in reality owed the partnership.

        Comment


          #5
          Good answer

          That's what made the most sense to me, thanks for the advice.
          JG
          JG

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