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USTaxAdvising
USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1237
Experience:  US Taxation specialist.
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I'm trying to help my mother out. She's a retired partner of

Customer Question

I'm trying to help my mother out. She's a retired partner of an LLC. She's paying taxes on passive income from a schedule k-1 but hasn't received any cash distributions. She did not retire on good terms with the primary partner and does not have a copy of the operating agreement. How can she go about getting a cash distribution?
Submitted: 2 years ago.
Category: Tax
Expert:  USTaxAdvising replied 2 years ago.

Hello,

Sorry to hear of your mothers situation. If she is a partner in the partnership then she is entitled to a copy of the Limited Partnership Agreement ("LPA") as she would have had to have signed it on her admission to the partnership. This document should stipulate how distributions are made.

Generally speaking, distributions are discretionary in a partnership. She is entitled to cash, should any exist, assuming she has a capital balance on her K-1.

If the partnership is not willing to pay her out of her capital she could sell her interest to another partner or perhaps another investor.

If that is not going to work then I would recommend an attorney which should be able to help get a court order for her to be paid out.

I hope this helps in some way. This is not a good set of facts but the first step is to get the LPA and determine what her rights are as a partner.

best regards,