Partnership Termination

[Gretel]

Hoped to find some info in TTB but info didn't cover my questions. As you can tell, I never dealt with this before and I am a little nervous.

2 partners (A & B), 45/55, cash basis, A left all of a sudden. Some legal actions very likely. B/S shows equity of $8,000 for A, 2007 P&L shows $15,000 loss. $40,000 Income from one project done by both still outstanding.

1. $8,000 due to A

2. $6,750 loss attributed to A

3. $18,000 due to A

4. A also gets 45% of cash left plus 45% of FMV of equipment. They don't have any debts.

5. On form 1065, short year, date of A's leaving, report $15,000 loss.

6. Sales agreement or whatever will happen will include $18,000 for A.

Do I have this right, so far?

What would happen if B decides to go with another partner instead of being a Schedule C? There are some weeks between A's leaving an admitting a new partner. Still termination of partnership and then new partnership?

I appreciate any advise. Sorry it's so long.

Gabriele

[Corduroy Frog]

Split it up

Gabriele, I can perhaps address some of this, but not the whole thing.

Maybe split this into three questions?

If it helps any, I think you're doing most of this right. One thing missing which will ultimately need to be disclosed is the partners' capital accounts going into the period.

[Gretel]

Thanks, Frog for your response. The capital accounts are part of the equity accounts.

I had hoped to get some more responses since I can not find much info anywhere else. Maybe someone can point me in a direction (other than google and IRS website, which I have tried) where I can find more info?

[Corduroy Frog]

Gabriele

Yes, sometimes our questions don't get a lot of response. Referring to my post above, I think it is because you tried to pack too much in one question. The situation as you presented it was very much like the mythological Hydra - a beast with many heads.

That's why our television is filled nowadays with politicians reducing their long speeches on complicated issues to 15-second "soundbytes." It will only get worse until Nov '08. Does the German public have to put up this?

[Gretel]

I heard you, Frog. Unfortunately I am not able to break up my long post, it's one situation, and, I also believe questions out of context are more likely to produce even more confusing responses or responses which are not helpful.

I will put up another post though in regards to research.

[Lion]

45%

45% of partnership leaving does not automatically dissolve partnership. However, having only one member would default to Schedule C. Husband taking me to movie, so not going any farther into this now!