Discussion:Partnership-Changes in Ownership During Yr

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Discussion Forum Index --> Tax Questions --> Partnership-Changes in Ownership During Yr

Uncle Sam (talk|edits) said:

19 January 2007
I have a partnership (not an LLC) with more than 1 buyout during year.

A 60% B 20% C 20%

Partner A buys out Partner B 1/6/06 Partner A buys out Partner C 3/27/06

A & B have special allocated depreciation from acquisition of previous buyout of other partners.

Do I make percentage allocations for 1/1-1/6 and again from 1/7-3/27 and report on 1065 only up to 3/27 - and the remainder on Partner A's 1040 Schedule E? (I don't do his personal return, but he is a business client from other business entities) B & C are not clients of mine.

Or - do I do a 12 month return, showing allocation of information for the 2 periods, and add 100% to Partner A for remainder of year?

Next year will be Schedule E only.

Any help here would be greatly appreciated.

Scot1 (talk|edits) said:

19 January 2007
In your situation the partnership terminates by operation of law on 3/27/06. To be a partnership, there must be two or more partners. Partner A would report all activity from 3/28/06 to 12/31/06 most likely on a Schedule C, depending on the type of business activity.

Laura of NY (talk|edits) said:

19 January 2007
How many partners are left after the buyouts? If PA is the only one left after the buyouts, the final BO would result in disolution of the partnership and PA would be on a schedule E (rental property?) for anything after 3/27 and a final 1065 would have to be filed with everyone receiving K-1's for their respective share of PS time. That is if I am understanding the whole situation correctly.

Uncle Sam (talk|edits) said:

19 January 2007
Sorry-I forgot to mention - this is a rental real estate activity.

After the buyouts of Partners B & C, Partner A owns 100%. There are other issues in this - that's a whole other subject - Partner A is also a tenant-unincorporated, non-llc proprietorship-medical practice. So were the (late) husbands of partners B & C.

Glmpllc (talk|edits) said:

19 January 2007
It's possible you could have a technical termination on the first buyout on 1/6 under 708(b)(1)(B). I bring this up because your facts state there were previous buyouts of other partners.


If, after 3/27, Partner A is the only tenant, I don't think that there is any schedule E to be filed. He's renting to himself. There is no transaction for tax purposes. If there are other tenants after 3/27, a schedule E is required, but should only report income and expenses related to the other tenants.

Uncle Sam (talk|edits) said:

19 January 2007
It's a medical arts office building with about 6 tenants.

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