Ok, just second guessing myself here. This seems to be as easy as typing in the partner name and SS#. HOWEVER, got a new 1065 client, that has been telling their tax preparers for 2 years to change the partner names. They did not do it, and STILL have a dead for two years person as a partner! He was only listed at 50% of capital, so there was no income on the K-1 he got last year. She was under the impression that it was hard to change the name, am I missing something?
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Sounds like you may have a technical termination on your hands. -
Really? My new client is listed as 100% Profit and Loss, this now dead brother was listed as 50% of capital. This is a very small Patnership, not even close to having to file a schedule L or M2. Guess I got a lot of research to do!Comment
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I am reading a technical termination occurs upon sale or exchange of 50% or more capital AND profits.Comment
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This was a brother that was probably just listed for LLC purposes, he probably didn't have anything to do with the business and didn't care.Comment
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It appears from reading that maybe the assets should have been distributed to his estate. HOWEVER, I am sure there is no longer an estate if he's been dead two years! So what should I tell these clients?Comment
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Deceased Partner
1. Any Section 754 election issues under the scenario you present?
2. Were prior years K-1's issued to the deceased partner's estate?
3. What does the Partnership Agreement provide regarding death of a partner?
4. Is this more trouble than it is likely to be worth?Friends double; family triple. Don't buy an audit for yourself. If someone has to go to jail make sure it is the client. Remember it is only taxes, nothing important.Comment
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No section 754 elections, K-1 were issued for the past 2 years in the deceased name and ss #, I'm not sure about an agreement yet--need to call client, yes is probably more trouble than is likely worth. However, I like to try to help people, and this must be straightened out, since most of my business in my rural area is word of mouth, it may actually be worth the trouble. I was reading in my TTB for small business and on page 20-14 a termination occurs when there is more than 50% of BOTH capital and profits. Thanks to everyone for your help!Comment
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