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- 99%-1% Partnership ended
99%-1% Partnership ended
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Greta
Level 9
02-07-2022
06:25 AM
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Father and son had 1%-99% partnership. Father dropped out. But son continued with the (hefty) business. He didn't change the PTR organization, and I had a lot of depreciation & info already entered on Form 1065. So to keep the software working, since the year was already over, I gave son two K-1s, for 99% and 1%. Should I force him to turn it into an S-corporation or Sch C in the future?
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jeffmcpa2010
Level 11
02-07-2022
07:33 AM
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Can you explain how the Father "Dropped out"?
Was there some kind of legal document transferring his ownership % to the son? (Gift, Sale, etc.) or just quit working in the business.
If so when was it dated. Unless the transfer happened in 2020, the Father would (Probably ) been a partner for a portion of 2021, and may need to receive a K-1 for his ownership percentage for the portion of the year he was an owner.
If there was a transfer, and it happened during 2021, the Partnership may have terminated on that date, and become a Proprietorship at that date.
If any on those happened, I am not sure the way you are planning to handle it would be correct.
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jeffmcpa2010
Level 11
02-07-2022
07:33 AM
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Can you explain how the Father "Dropped out"?
Was there some kind of legal document transferring his ownership % to the son? (Gift, Sale, etc.) or just quit working in the business.
If so when was it dated. Unless the transfer happened in 2020, the Father would (Probably ) been a partner for a portion of 2021, and may need to receive a K-1 for his ownership percentage for the portion of the year he was an owner.
If there was a transfer, and it happened during 2021, the Partnership may have terminated on that date, and become a Proprietorship at that date.
If any on those happened, I am not sure the way you are planning to handle it would be correct.
