Partnership tech. termination

[TAX4US]

Partnership had a technical termination on 12-31-2015. The way I understand I would on form 1065 on line g check the #2 box and the #6 box. Since the new partnership would begin the next day 01-01-2016 I would not have the new return due until next year. This was a calander year partnership with 2 partners, no assets except cash (2100.00) at year end. Daughter-in-law bought father out on 12-31-2015. This is what the attorney instructed them to due to avoid having 2 short years. Partnership still doing the same kind of work as before no change there and no employees. Gross income has been about 40k for past 10 years with son being guaranteed salary(does 95% of the work) which has always left a little in the bank at year end. This arrangement will continue on. Am I ok on the fact that a new partnership filing will be due next year using the same FEIN? Do not want any of those nasty penalties for not filing. What are your thoughts? BTY I saw a copy of the check paid to father. It is dated 12-31-2015 and cleared bank on 01-04-2016

[spanel]

Partnership had a technical termination on 12-31-2015. The way I understand I would on form 1065 on line g check the #2 box and the #6 box. Since the new partnership would begin the next day 01-01-2016 I would not have the new return due until next year. This was a calander year partnership with 2 partners, no assets except cash (2100.00) at year end. Daughter-in-law bought father out on 12-31-2015. This is what the attorney instructed them to due to avoid having 2 short years. Partnership still doing the same kind of work as before no change there and no employees. Gross income has been about 40k for past 10 years with son being guaranteed salary(does 95% of the work) which has always left a little in the bank at year end. This arrangement will continue on. Am I ok on the fact that a new partnership filing will be due next year using the same FEIN? Do not want any of those nasty penalties for not filing. What are your thoughts? BTY I saw a copy of the check paid to father. It is dated 12-31-2015 and cleared bank on 01-04-2016

Was this just a partnership with 2 partners? and 1 bought the other out?

Chris

[TAX4US]

2 partners Father and son. Father sold his share to daughter in law. Still has 2 partners and business continuing as usual.

[spanel]

2 partners Father and son. Father sold his share to daughter in law. Still has 2 partners and business continuing as usual.

If you are killing the "old partnership", then you cannot reuse the "old" ein. You will have to apply for all new numbers (ein/unemployment/etc/bank accounts/)

Chris

[TAX4US]

It appears that daughter in law stepped in the shoes of Father. Ptrship was not dissolved and continues on. At least that is what I make of the transactions that took place. Son has 50% and daughter in law has the other 50%. That's why I tried to look at this as technical termination instead of a full dissolvement. There were no prior elections or notes receiveble at year end. Only asset was cash in bank. Just trying to get a handle on this.

[TAXNJ]

If attorney

Partnership had a technical termination on 12-31-2015. The way I understand I would on form 1065 on line g check the #2 box and the #6 box. Since the new partnership would begin the next day 01-01-2016 I would not have the new return due until next year. This was a calander year partnership with 2 partners, no assets except cash (2100.00) at year end. Daughter-in-law bought father out on 12-31-2015. This is what the attorney instructed them to due to avoid having 2 short years. Partnership still doing the same kind of work as before no change there and no employees. Gross income has been about 40k for past 10 years with son being guaranteed salary(does 95% of the work) which has always left a little in the bank at year end. This arrangement will continue on. Am I ok on the fact that a new partnership filing will be due next year using the same FEIN? Do not want any of those nasty penalties for not filing. What are your thoughts? BTY I saw a copy of the check paid to father. It is dated 12-31-2015 and cleared bank on 01-04-2016

If attorney (hopefully a Tax Attorney) as you say, instructed them, recommend you consult & work with the attorney (and client) about the issue so you will have clearer knowledge of their decision. The issues you raise should have been addressed by the attorney prior.

The attorney's decision (reason) will never be found on this site.

[veritas]

Irs instructions

Say use the same TIN. I believe it's also noted in TheTaxbook.

[Snaggletooth]

Real-World Answer

Keep the same FEIN. The IRS will appreciate not having to jump through hoops to deal with a new number and deal with a dissolution. Issue a K-1 to the retiring partner showing disposition of his interest effective 01/01/16, with zero allocation of income and other K-1 items.

Observe filing deadlines.

I've done this 3-4 times with no repercussions, and no party has a problem with it.

[Burke]

If you are killing the "old partnership", then you cannot reuse the "old" ein. You will have to apply for all new numbers (ein/unemployment/etc/bank accounts/)

Chris

Sounds like a Sale of Partnership Interest rather than a termination of the partnership. So when the "daughter bought the father out" on 12/31/15, you need to determine if it was at a gain for him by calculating his basis up to the date of sale. Her purchase amount would be her basis in the partnership. Many times in the case of families, this is rarely done, but should be. Same entity continues on with same EIN.

[TAXNJ]

TAX4US - well

Did you talk to the attorney or did the 8 or so reply posts help?

What is the result?

[TAX4US]

it appears this will be a tech termination. Thanks to all the answers from the post.