Help with another partnership Question

[rfk]

I have a client that went from an LLC sole prop to an LLC Partnership. Two brothers now at 50 / 50. Main concern is about transferring of the assets for Capital accounts etc.

There is cash in the bank and inventory; no AR etc. Liabilities are some bank loans and a personal loan from someone. How do I record these values on the tax return starting off on the right foot? It was easier when it was an LLC sole prop.

Thanks.

rfk

[oceanlovin'ea]

Just a thought....since I am not an expert on partnerships. But if brother A was a sole prop and the assets and liabilities you mentioned are ones that were his with the sole prop, then that would be his basis in the partnership. Is brother B contributing any money or whatever to the partnership? That would be his basis.

They can be 50/50 partners in sharing profits and losses and still not be 50/50 in ownership. If that is not right, someone can correct me.

Is there a form that would have to be filed with IRS showing or requesting change from sole prop to partnership? Not sure about that.

Linda, EA

[rfk]

Makes sense

That makes sense about the 50 / 50 sharing and contributions by one of the brothers. I will add this to the circumstance.

Thanks, Linda

[ChEAr$]

While the LLC status with the state may not change, a new member has been admitted.
(Notice; not partner; but member).

As far as IRS is concerned it is a new form of business (partnership) and a new bookkeeping system should be set up; but you know that already.)

And, if memory serves, which it don't some times, might need a new EIN. Ah, I do remember now, that was the case when my client went the other way, from a two member LLC to a single member LLC.