I have a hard time wrapping my mind around what constitutes regular distributions, distributions from the sale and other items involved in the closing. 50% of interest of purchased by 37.5% partner so books had to be closed. I am also not sure how the prorations done for rent income and expenses effect the P&L of the old and new 1065.
Let's assume the sale was on the 10th of a month with 30 days, A=old 1065 33.3%, B=new 1065 66.7%
Rent 100,000 - A=33,300, B=66,700, book entry made shows 66,700 as A/P to B and rental income has been reduced on P&L. 66,700 is income to B, correct?, and will be treated as contribution by the partners of B? (of course minus allocated expenses)
Anything relating to these allocations then also constitute regular distributions from business operations to leaving partner and do not effect the purchase price?
What about funds collected for future elevator repairs? They are part the purchase price, right?
How about prorated taxes, are they all expenses for A?
I know this is really complicated and hope it even makes sense what I am asking. I also hope that I at least can get a pointer.
Let's assume the sale was on the 10th of a month with 30 days, A=old 1065 33.3%, B=new 1065 66.7%
Rent 100,000 - A=33,300, B=66,700, book entry made shows 66,700 as A/P to B and rental income has been reduced on P&L. 66,700 is income to B, correct?, and will be treated as contribution by the partners of B? (of course minus allocated expenses)
Anything relating to these allocations then also constitute regular distributions from business operations to leaving partner and do not effect the purchase price?
What about funds collected for future elevator repairs? They are part the purchase price, right?
How about prorated taxes, are they all expenses for A?
I know this is really complicated and hope it even makes sense what I am asking. I also hope that I at least can get a pointer.