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"Treasury Stock" in a partnership

SweetLeaf
Level 2

A partnership that I'm working on had a few partners sell their interest and part of that interest was sold back to the partnership.  Is this allowed?  Doesn't it need to flow thru to something?  

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PhoebeRoberts
Level 11
Level 11

The leaving partner's remaining capital account gets distributed among the remaining partners. (IRC 704 presumably tells you how; I don't know off the top of my head.) This is one of the reasons that capital accounts don't represent outside basis.

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PhoebeRoberts
Level 11
Level 11

The leaving partner's remaining capital account gets distributed among the remaining partners. (IRC 704 presumably tells you how; I don't know off the top of my head.) This is one of the reasons that capital accounts don't represent outside basis.

SweetLeaf
Level 2

Thank you so much for your insight!  I'll take a look at the rules

 

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