George4Tacks
Level 15
03-11-2023
01:34 PM
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My read is that the member sold their interest for money.
The buyer assumed the seller's interest.
The customer database did not change hands, only the ownership interest.
Seller reports on their tax return as a sale of interest.
The buyer needs to keep track of their outside basis in the ownership interest.
The partnership shuffles the ownership interest to the new owner and does proper accounting to issue an extra k-1 for that year.
I assume that seller no longer has a legal access to the customer database.
Answers are easy. Questions are hard!