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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4675
Experience:  35 years tax experience, including four years at a Big 4 firm.
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What happens if a partnership dissovles and a partner has negative

Customer Question

What happens if a partnership dissovles and a partner has negative GAAP basis captial account. How is that reported on the K-1
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Customer: An LLP was dissloved in 2015. One partner has a positive GAAP basis capital account of $50k and another a negative capital account of $50k. How is this handled on the final tax return?
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Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.
Hi from Just Answer. I'mCustomer I'll assist. The tax return does not need to report the capital gain or loss on dissolution. The partners do. Just report the GAAP basis as positive or negative on the final 1065 and K-1. The partners have to convert that to tax basis, and will. No gain or loss is partnership reportable. Thanks for asking at Just Answer. Positive feedback is appreciated. I'mCustomer