Parntership buy out

[judys3]

I have a customer that is a partnership.  One partner stepped away.  The other partner sold the assets and name to an individual but this partner is still in the partnership.  The partner that sold owns very little interest in the partnership now.  

Question is.  How do I add the new partner and "sell" him the assets (written in legal agreement) for him to get benefit of depreciation?  Or is there no way?

Note to add that the sell is on a 0 interest monthly payment plan

[qbteachmt]

There needs to be a bit more clarity.

There still is a partnership?

The partner that stepped away wasn't bought out by any other partner or the partnership itself? What happened to their share of the partnership, then?

One partner cannot sell the partnership assets if the partnership owns the assets. Or, the partnership first distributed/sold the assets to this one partner, who then sold them as an individual?

How does the partner "that sold" also still own "very little" interest? What did this person sell? What did they retain? Who did they sell to? What did they sell? Which partner is this: the one that stepped away, the one that sold something not belonging to them? Object and subject are a bit confused, here.

You stated the partnership name was sold, but does that entity still exist? The Partnership continued operating under a new name, or formed a new partnership or is dissolved or dissolving or no longer in business or?

[judys3]

The partnership still exists, same name, same EIN.

The one partner that stepped away did not leave with anything.  He did not sell.  

The one partner that stayed originally owed 50% of the partnership.  He has sold his 49% plus the partner that stepped aways 50% to the new partner that now owns 99%.

I wondered that myself with the sale of "assets".

Really this is a nice person kind of deal.  

[qbteachmt]

"the new partner that now owns 99%."

Then this makes no sense: "How do I add the new partner and "sell" him the assets"

It's one or the other:

The old partner pulled the assets from the partnership, and owning them personally, sold them to an individual.

Or;

The partnership still owns assets, and the new partner bought into the partnership, and the value of the assets are part of the justification for the buy in.

Or, I suppose:

The old partner pulled the assets out of the partnership, sold them as an individual, to another individual, who owns them personally and wants to contribute them to the existing old partnership? Sheesh.

Nice people or not, none of this is making sense. Ownership matters.

"Note to add that the sell is on a 0 interest monthly payment plan"

There is no such thing as 0 interest in business.

[judys3]

I'm sorry I am not relaying this correctly. This is what happaned.

The partnership still owns assets, and the new partner bought into the partnership, and the value of the assets are part of the justification for the buy in.

The original partnership was father and son 50/50 ownership.  The son steps out leaving 100 ownership to dad and the dad sold 99% to the new owner.  This all occurred at the same time, same paperwork filed. 

[qbteachmt]

Okay, then nothing changed for the partnership. There is no new depreciation. Start here:

https://accountants.intuit.com/support/en-us/help-article/file-management/adding-removing-partners-s...

It still isn't clear who is benefiting from the payments, which seem to be a buy in and not a purchase of partner interest. It will matter, if you are doing the 1065 and also the individual 1040s.

[judys3]

This is what I thought about the depreciation but I wanted to make sure.  I hate it for the new partner but it is what it is.

The 1% now partner will receive monthly payments from the new 99% partner.  I wasn't sure how to treat the payments to the now 1% partner.

Thank you for the information.

[qbteachmt]

"The 1% now partner will receive monthly payments from the new 99% partner.  I wasn't sure how to treat the payments to the now 1% partner."

If you sold me your shares of Ford, nothing changed at Ford.

Again, it depends on which return you are working on. You seem to have a partner selling his share at $0, and absent other partners, that would become a single-member LLC as disregarded entity. Instead, he turned around and sold 99% under an installment sale.

Meanwhile, the partnership, as its own entity, is not changed. Nothing happened here.

[judys3]

I'll actually be working on all returns.  

[sjrcpa]

For increased depreciation to new partner you need a 754 election. You are not going to figure this out on March 15. Extend the return.