Distribution of assets from a partnership

[duanecpa]

I have a client for which 2013 is the final year for the partnership. None of the assets of the partnership were sold. Each of the 2 partners took what they individually wanted in terms of assets from the partnership.

Need guidance as to how to account for these distributions on the final tax return of the partnership.

Thank you.

[jimmcg]

Asset distribution

Partners provide any services to partnership? What type of business? Assets taken in return for? (Return on investment, services rendered, liquidation of assets, etc.)

[TXEA]

Going to need more information.....

How was the initial capital contributed to the partnership? e.g. , all cash, cash and equipment, services provided in exchange for capital....What exactly did each partner contribute? Any capital contributions subject to a liability?

How long has the partnership in existence?

How long has each partner been a partner?

How did they determine the FMV of what was taken?

Did one partner receive an amount of FMV greater than basis in the partnership?

Were there any unrealized receivables taken? e.g. cash basis receivables? fixed assets subject to depreciation recapture?

Any assets subject to Sec 179 recapture?

Were there any debts for the partnership? Any property taken where one partner was relieved of liability, e.g. recourse vs. non-recourse loans?

How was the final cash balance distributed?

What is the basis of each partners' interest in the partnership?

The key element that needs to be analyzed is whether any partner received an interest greater that his/her basis. The above questions help to clarify this?

Another issue to consider is if a partner contributed fixed assets as opposed to cash that was substantially appreciated at the time of contribution, then it is critical that the contributing partner took the asset on liquidation.