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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10146
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I need to get clear, that if a partner sells his interest

Customer Question

Hi, I need to get clear, that if a partner sells his interest mid year, does he receive a K-1? And what amount woud be reported since the 1065 has not been prepared until end of year
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.
Hi,.Yes a final K-1 has to be prepared..In part III above the column you'll see the place to check Final K-1.There are some ownership allocation worksheets included on the K-1 worksheet to indicate ownership changes and dates of the changes..
Expert:  Lane replied 1 year ago.
On each line, enter the partner's percentage share of the partnership's profit, loss, and capital as of the beginning and end of the partnership's tax year, as determined under the partnership agreement. If a partner's interest commences after the beginning of the partnership's tax year, enter in the Beginning column the percentages that existed for the partner immediately after admission. If a partner's interest terminates before the end of the partnership's tax year, enter in the Ending column the percentages that existed immediately before termination.
Expert:  Lane replied 1 year ago.
Now, on the line for capital... (This is all just from the instructions).Enter the percentage share of the capital that the partner would receive if the partnership was liquidated by the distribution of undivided interests in partnership assets and liabilities. If the partner's capital account is negative or zero, show the percentage ownership of capital as zero.
Expert:  Lane replied 1 year ago.
And finally, If the partnership agreement does not express the partner's share of profit, loss, and capital as fixed percentages, the partnership can use a reasonable method in arriving at each percentage for purposes of completing the items required by item J, as long as such method is consistent with the partnership agreement and is applied consistently from year to year. Maintain records to support the share of profits, share of losses, and share of capital reported for each partner.Lane. I this has helped I'd appreciate a positive rating … (by clicking – or touching on - the stars or smileys on your screen) - That's the ONLY way I can be credited for the work here..