Edsel Posted October 4, 2018 Report Posted October 4, 2018 A partner is bought out effective 01/01/18. The partner receives $XXXX dollars and has a basis of $XXXX as of 12/31/17. What is the partnership's responsibility to trigger the partner to show disposition of his interest? On the K-1 section reporting the basis, leave the basis as it was. I've been told before on another post that if there is no remaining interest, the basis (or capital) should show zero. Issue a 1099B for the gross payment to the partner upon selling his interest. Enter the basis in the proper place. Same as above, except do not enter anything in the box for basis. It is the partner's responsibility to track his own basis. The partnership has no responsibility to issue an information statement to force the partner to report the sale. Some other idea. Y'all can roll yer own chew... Quote
Abby Normal Posted October 4, 2018 Report Posted October 4, 2018 2 hours ago, Edsel said: What is the partnership's responsibility to trigger the partner to show disposition of his interest None. It's totally on the partner. 2 hours ago, Edsel said: On the K-1 section reporting the basis, leave the basis as it was. I've been told before on another post that if there is no remaining interest, the basis (or capital) should show zero K1 doesn't show basis, just capital and share of liabilities. If you're referring to a basis worksheet, the distribution (buy out amount) will reduce the basis, but not below zero. Not being liable for the liabilities anymore also reduces basis. 2 hours ago, Edsel said: Y'all can roll yer own chew No I can't because I have no clue what that means. 1 5 Quote
jklcpa Posted October 4, 2018 Report Posted October 4, 2018 Hey Monty, I'll take what's behind curtain # 6. If any part of the buyout involved unrealized receivables or inventory, the partnership is required to file form 8308. Also, if this is more than a 50% change in ownership, you have a technical termination. 3 Quote
jklcpa Posted October 4, 2018 Report Posted October 4, 2018 37 minutes ago, Abby Normal said: 2 hours ago, Edsel said: Y'all can roll yer own chew No I can't because I have no clue what that means. When a solution doesn't exist, the person comes up with one of their own design. 1 1 Quote
Edsel Posted October 6, 2018 Author Report Posted October 6, 2018 Geographical idioms only - Abnormal and Judy don't live here. Tennessee, Kentucky, Virginia, North and South Carolina in particular. Tobacco farmers grow tobacco during the growing season, and it is harvested in late August early September. From that time until November, it hangs in a barn and undergoes a chemical process called "curing out" by simply hanging in a dry barn with some bit of air circulation. After it "cures out" it is ready to be sent to market to be crushed and diced into cigarettes. A farmer who has the nicotine habit can during October/November take a big leaf of cured tobacco, roll it up into paper, light up, and smoke instead of going to the store and paying huge money for cigarettes. Hence, they "roll their own chew". Translated into vernacular, "When a solution doesn't exist, the person comes up with one of their own design," per Judy. 1 Quote
Abby Normal Posted October 6, 2018 Report Posted October 6, 2018 It's the 'chew' part that makes no sense, if you're going to be smoking it instead of chewing it. Unless 'chew' is local vernacular for tobacco? Quote
Edsel Posted October 7, 2018 Author Report Posted October 7, 2018 Abnormal, it's like "poetic license" - it doesn't have to rhyme. You civilized people would never understand. Only us hicks. 2 Quote
Abby Normal Posted October 7, 2018 Report Posted October 7, 2018 Oh, I understand poetic license just fine. I'm just a bit of a logophile, and I like to learn the etymology of words and phrases. 1 Quote
Catherine Posted October 7, 2018 Report Posted October 7, 2018 I like the etymology, and I also like oddball or arcane words. A recent favorite is "casuistry" which comes in WAY more handy than one would have thought. Go look it up for yourselves and see! 1 Quote
Abby Normal Posted October 8, 2018 Report Posted October 8, 2018 They also make great hangman words. I have a 3 letter hangman word that no one has ever gotten. 1 Quote
Edsel Posted October 12, 2018 Author Report Posted October 12, 2018 On 10/4/2018 at 4:08 PM, jklcpa said: If any part of the buyout involved unrealized receivables or inventory, the partnership is required to file form 8308. Also, if this is more than a 50% change in ownership, you have a technical termination. Judy, there are in fact unrealized receivables and inventory, thus the 8308 will be required. What is the impact on the partner? Also, I've never understood what the IRS means by "unrealized receivables." Does this mean unbilled revenue that should have been recorded but not yet billed, or simply receivables on the books which have not yet been paid? Quote
jklcpa Posted October 12, 2018 Report Posted October 12, 2018 Unrealized receivables are "hot assets" - This might help explain it: https://www.lexisnexis.com/legalnewsroom/tax-law/b/federaltaxation/posts/tax-issues-involving-unrealized-receivables This: https://www.cengage.com/resource_uploads/static_resources/0324304838/6668/definitions-11.html This article from The Tax Advisor talks about the impact to the partner: https://www.thetaxadviser.com/issues/2010/aug/clinic-story-08.html tTis one has a good overview too: http://irszilla.com/partnerships/payments-for-unrealized-receivables-and-inventory-items.htm 2 Quote
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