Question

Jose is considering selling his 30% in the M&J Partnership that he helped Maria start several years ago. What would some of the major considerations be from Jose's perspective and the partnership's perspective, if Jose were to sell his partnership interest to Juan for a $30,000.00 gain? Conversely, what would some of the major considerations be if he sold the partnership interest at a loss of $10,000.00 to Juan?

Answer 1

partnership firm means when two or more individual person are ready to start up a common business.For starting the business an agreement is executed among them which consist of clauses such

Capital invested by each partner

Remuneration withdrawan

ratio of profit

interest on capital

Dissolution clause

On leaving partnership Jose has to consider all the clauses that were signed at the time when deed was made.He has to think that what will be the impact after he will leave.Both partners should mutually agreed upon on dissolution.

They have to sign legal documents of dissolution In case of partnership at will, a partner can dissolve it by giving written notice of dissolution to other partners duly signed by him. Notice must be very clear and certain. A notice once given cannot be withdrawn without the consent of other partners

When a partnership is dissolved, and after the debts to the third parties have been paid and advances made by a partner have been repaid, the assets are insufficient to repay each partner his capital in full, any deficiencies must be borne by the partners in the same proportion as the profits would have been divided

(b) The assets of a firm are to be applied in paying
1. joint debts to third parties
2. advances, as distinguished from capital, of each partner
3. to each partner what is due from the firm to him in respect of capital.

In after the above payments are made, there is surplus, that surplus is to be divided in the proportion.

So after payment of all dues then only share left for Jose he can dissolve.

Jose has to think before existing about his personal benefit if he got gain by selling his interest then he should sell.

But if he is selling on loss then it will not be going concern so they should dissolve partnership firm.Both partners should wind up the firm,after paying of all his liabilities.If Juan wants to purchase then must ensure that all existing liabilites has been paid by Jose