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Does the buyout of a partner constitute a purchase of a depreciable asset?

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Level 3

A partnership was dissolved by one partner buying out the other. The remaining party continues the business as as sole proprietorship. All the hard assets stayed with the business.  The selling partners share was 49% and he invested $19,600.  The buying partner paid the selling partner $10,000 for his part of the business.  Does the $10,000 constitute an asset that can be depreciated or amortized?

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Level 15

Your client bought 49% of all the assets of the partnership. Each asset on the balance sheet has a FMV. The assets get stepped up to FMV (49%). If anything is depreciable it now has a higher basis. §754


ex-AllStar

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Highlighted
Level 15

Your client bought 49% of all the assets of the partnership. Each asset on the balance sheet has a FMV. The assets get stepped up to FMV (49%). If anything is depreciable it now has a higher basis. §754


ex-AllStar

View solution in original post

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