What are the tax consequences of liquidating a partnership?
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What are the tax consequences of liquidating a partnership?
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Solution Summary
The solution explains how basis in a partnership is calculated for individual reporting on sale of a partnership interest. It also discusses the selling price when assets, other than cash, are transferred to a partner in liquidation. The explanation is given in 395 words.
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Question: What are the tax consequences of liquidating a partnership?
Solution:
The tax consequences are that each partner will have a reportable capital gain transaction with either a gain or a loss. In this respect, the transaction is very much like buying and selling stock in the stock market.
The more difficult part of this transaction is to determine both the selling price and the basis in the partnership interest. Usually the selling price is fairly straightforward: a partner receives cash or assets in exchange for his/her interest in the partnership. Even in this instance, there can ...
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