Question

IRC 706 Code: Regulations: Treas. Reg. S 1.706-1 QUESTIONS Alvin, Dave, and Dave's wife, Laurie, are one-third partners in a calendar-year, cash-method partnership that buys and sells antique furniture and glassware. Alvin, Dave's father, has operated the business for forty years. Dave and Laurie have spent twenty-five years learning all aspects of the business. Dave's and Laurie's son, Jason, who just turned 22, would like to become a partner, Jason recently graduated from college and has worked in the business part-time for the last five years. Alvin is heading toward retirement and plans to sell all or part of his interest to 1. Jason on July 1. a. On July 1, Alvin sells his entire one-third interest to Jason. Assuming the partnership earns $300,000 for the taxable year, determine each partner's distributive share of the partnership's income for the year of the sale. Would it make any difference if the partnership liquidated Alvin's interest on July 1 and admitted Jason to the partnership (for an appropriate capital contribution) as a one-third partner on July 1?

Answer 1

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  lassmate Date Sheut 3 orla e31040010