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Category: Business Law
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What options does a business partner have if a partner in a

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What options does a business partner have if a partner in a business wants to leave the partnership but needs to help pay off the debt and has a negative equity
Submitted: 6 years ago.
Category: Business Law
Expert:  INFOLAWYER replied 6 years ago.
Can buy him out or can dissolve the partnership.
Customer: replied 6 years ago.

Would like more detail for $40.

Is it necessary to dissolve if the other 2 partners wish to keep the business going?

How does the buyout effect the partner getting out?


Expert:  INFOLAWYER replied 6 years ago.
If can agree that would be ideal. You may want to assume some of his debts but pay less for his share of the partnership. If he has no equity in it, but only debt, you may negotiate that he walks away in exchange for giving up all rights therein. You have the leverage here.
Customer: replied 6 years ago.

Does the partner leaving included the debt that the company takes over need to report this debt as income?


Expert:  INFOLAWYER replied 6 years ago.
I would defer to an accountant on the tax treatment but generally if debt is erased it would be considered income.
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