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Partners share of partnership purchased

clr600
Level 7

Clients is 50% partner in LLC partnership. Buying out other partner for $200,000.00. No asset no basis for both partners. This is deductible cost for purchasing partner over how many years and a total capital gain for selling partner.????


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TaxMonkey
Level 8

This is actually a rather complicated question.  You mention that there are no assets being purchased, but you do not state was is actually being purchased.  Likely you meant that there are no tangible assets, but the purchase invovles intangible assets, which could be things like a client list, patents, trade secrets, etc.  Or possible it could be a non-compete agreement.


Intangibles can be amortized over 15 years, however you must evaluate if the intangible is "self created" which may be somewhat murky in a 50 / 50 partnership.


An attorney should definitely be involved in structuring this deal so that there is agreement on specifically what is being purchased for $200k, and what the treatment is.

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TaxMonkey
Level 8

This is actually a rather complicated question.  You mention that there are no assets being purchased, but you do not state was is actually being purchased.  Likely you meant that there are no tangible assets, but the purchase invovles intangible assets, which could be things like a client list, patents, trade secrets, etc.  Or possible it could be a non-compete agreement.


Intangibles can be amortized over 15 years, however you must evaluate if the intangible is "self created" which may be somewhat murky in a 50 / 50 partnership.


An attorney should definitely be involved in structuring this deal so that there is agreement on specifically what is being purchased for $200k, and what the treatment is.

View solution in original post

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