partnership ein

[jbdaigle1102]

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?

[George4Tacks]

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-a...

[jbdaigle1102]

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.

[jbdaigle1102]

In a baked goods business , where cupcakes and cookies sold have a finite life,  should items such as flour, sugar etc be treated as inventory or supplies?

[George4Tacks]

Start another thread - only one concept per thread. I have confused this one enough.

[George4Tacks · Accepted solution]

The partnership would still continue. https://www.irs.gov/newsroom/questions-and-answers-about-technical-terminations-internal-revenue-cod... 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-unincorpo...

[jbdaigle1102]

I did mention the QJV to them as an option.    Yes we are Louisiana a community property state.   Thanks for you helpful advice.   

[jbdaigle1102]

another question - can a partner go from a partnership filing 1065 and do a QJV with spouse without having to request change from IRS?

[jbdaigle1102]

I think the partnership was classified as an LLC - so would this complicate doing a QJV?