Software Help - Disposition of a partnership

[BulldogTom]

Client was a GP and an active participant in a partnership. Left the PS mid year. How do I show the disposition of the partnership in ATX? The K-1 only has complete dispositon buttons for a PTP or a Passive Activity.

I know I am going to slap my forehead when you tell me the answer.

Thanks in advance.

Tom

Hollister, CA

[mcb39]

I would think about doing a part year final return for the partnership including the partner who is leaving; ie: Jan 1 through June 30.

Then I would think about doing a part year return for the rest of the partners from July 1 through Dec 31. I did one of these several years ago when one partner sold his share in May, but that may not be your situation. I still think that two partyear returns might be correct.

As I am in total chaos at the moment, which includes no power in my office, I can't look it up for you. Moved necessary operations to the kitchen this AM.

[BulldogTom]

Not doing the ps return, just the partner. Just can't figure out how to make the software do the disposition of the ps interest.

Thanks

Tom

Hollister, CA

[Pacun]

The partnership is an asset for ATX and then you dispose it. I am using logic over substance.

[jklcpa]

Tom, the effects of your client leaving the partnership should be included on the K-1 if the partnership redeemed his interest or if other partners bought him out. You would simply check the "final" box on the K-1 input screen in ATX. Checking this box will tell the program it is the final reporting and will allow the calculation/inclusion of any losses that may have been limited in prior years that would be allowed because of this being the final year.

ETA: at the partnership level, two short year returns would only be completed in a year when the partnership had more than a 50% change in ownership causing a technical termination, but if less than 50% interest changed hands or was redeemed then the partnership files one return for the entire year with financial activity reported to the partners either by closing the books and records through the date of the change in ownership and using those actual amounts, or by prorating the income/loss/etc. based on the number of days the partner was in the partnership during the year.

[mcb39]

Totally agree with Kea. If you are not doing the 1065, your client should receive a K1 from the Partnership showing the allocation of his departure. Depending on the type of business it was, assets, "hot" assets and other distributions will come into play.

[Kea]

Thanks for agreeing with me, Marilyn? I have no experience with disposition of partnerships. And I don't use ATX anymore. But it is nice to be appreciated. :scratch_head:

[BulldogTom]

jklcpa - where is the "final" box on the input screen? That is what I am looking for.

I thank you all for the advice on the tax aspects, but I was only looking for the little checkmark or box for how to tell the software that the client is no longer a partner in the partnership. I only saw the boxes for the "complete disposition of a passive activity" and "complete disposition of a PTP". Just looking for the box that says "final".

Thanks

Tom

Hollister, CA

[jklcpa]

Tom, I'd check the box marked "complete disposition of passive activity" and that *should* tell the program to allow any suspended items, if any. I could have sworn there was a check box marked "final" on the input screen. Obviously, check the return for correct calcs and if the K-1 input comes forward to next year, delete it.

Not for you Tom, but I only put the info in about the proper handling of partnership returns relating changes of ownership, short years and technical terminations so that someone possibly reading this thread in the future wouldn't be misled into thinking that filing 2 short year returns is correct in all instances.

Judy

[mcb39]

Thanks for agreeing with me, Marilyn? I have no experience with disposition of partnerships. And I don't use ATX anymore. But it is nice to be appreciated.

Of course you are appreciated Kea, but I meant jklcpa. Sorry for the confusion.