SweetLeaf
Level 2
05-16-2022
10:40 AM
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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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Level 11
05-16-2022
10:43 AM
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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
05-16-2022
10:54 AM
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Thank you so much for your insight! I'll take a look at the rules