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I formed a two-person partnership, and we each put in $70000 in 2009. My partner died this year, and I am ending the partnership. It currently has no value other than a bank account of $25000. On the K-1 worksheet, the only choice that seemed possible to me was ABANDONMENT. I did not sell or gift it. Do I get a $70000 loss on Form 4797 since it was not sold? Or do I get a loss of $45000 since I will take the banking money? Or do I get no type of loss at all?
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Basis in a partnership starts with the amount of your initial investment. It goes up for your share of income and capital contributions through the years, and down for your share of losses, separately stated deductions, and distributions through the years.
You could have a gain or a loss upon termination if it is liquidated.
Will the business continue as a sole proprietorship?
The more I know the more I don’t know.
