According to the buyout contract, the bought out partner is to have no obligations for the company, however it says he will give up claims to assets after all the payments are made (in 5 years). So, I'm thinking the business stays on 1065 until paid in full, I take his percentage off of profits and loss but leave it on for assets. I assume he will not need a K-1 unless assets are sold or something like that with assets. After the 5 years is complete, the 100% partner can then elect schedule C if he wants and the laws don't change. Am I right? Will being on as a percentage of assets make him liable in any way?
-
-
It sounds like the assets are collateral for the loan in case the buyer defaults. Does not sound like a continuation of partnership to me.Originally posted by Super Mom View Post -
Wouldn't he be a limited partner in the partnership? But I'm thinking a limited partner has SOME liability. If he has NONE, don't see how I can continue to put him on. I'm really not sure what to do on this one.Last edited by Super Mom; 03-02-2017, 10:30 AM.Comment
-
I just spoke to the bought out partner and he said it was his understanding the he would continue to get k-1's until paid off and that he has to stay on the partnership because of a loan they have that has his name on it. So I guess I do like my original thought, show him at 0% in profit and loss and just show a percentage in capital. I guess I adjust the detail form for the K-1 to make it fit the up until August for his share of profit or loss up until then. Anyone that has done this, sound right? Any advice is MUCH appreciated as this is a whole learning experience for me! Thanks!!!Comment
Comment