partnership ein

Forum|Forum|6 years ago
December 28, 2019
1 reply
15 views

Would like advice from those of you who can be helpful and informative on this issue. I was approached by a potential client who was a partner in a baked goods business filing 1065 and each partner receiving k-1's. This partnership was in business for approx 3 years. After the first 3 months of 2019 one partner bought out the other. Would the proper route be to file a partnership return for the first three months they were in business together issuing k-1's for only this portion of the year and then the new owner and NEW partner file the remaining 9 months under new partnership? Also would a new EIN number be necessary for the new partnership?

ProSeries Professional

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Best answer by George4Tacks

The partnership would still continue. https://www.irs.gov/newsroom/questions-and-answers-about-technical-terminations-internal-revenue-code-irc-sec-708 clarifies that no technical termination would happen in this scenario.

I have to admit that the two "new" partners are also husband and wife might add to the possibilities. Is this a community property state? Possibly a Qualified Joint Venture and no need to file 1065. https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorporated-businesses

George4Tacks

Level 15

We are always helpful and informative.

At the beginning and the end of the year, the partnership still has 3 partners, so it does not need a new EIN. You will need to allocate the part year income for the new and exiting partners so that they properly reflect their proportionate share of income. There will be 4 K-1's and one will be marked final.

You can get a bit more info from this recent thread https://proconnect.intuit.com/community/proseries-discussions/discussion/re-sale-of-partnership-to-another-individual/01/40581#M22215

Answers are easy. Questions are hard!

jbdaigle1102Author

Level 3

sorry for confusion - further explanation - let me try again - Lets say Sally and Sue have a partnership-

Sally's share after 3 months into the calendar year, is bought out by Sue and Sue's husband Tom. Sally is no longer affiliated with the partnership except for the first 3 calendar months. Sue and Tom are now the owners of the partnership from April thru December. Please advise using this scenario.

George4TacksAnswer

Level 15

The partnership would still continue. https://www.irs.gov/newsroom/questions-and-answers-about-technical-terminations-internal-revenue-code-irc-sec-708 clarifies that no technical termination would happen in this scenario.

I have to admit that the two "new" partners are also husband and wife might add to the possibilities. Is this a community property state? Possibly a Qualified Joint Venture and no need to file 1065. https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorporated-businesses

Answers are easy. Questions are hard!

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