Don't want to step in front of Ira, but I'm sure he's busy. Generally,
under IRC 708, if more than 50% of the interests in the partnership are sold
or exchanged, the partnership will experience a technical termination. That
means the partnership's tax year is deemed to have ended on the date of the
exchange, and the resulting partnership is a "new" one for tax election and
attribute purposes. I'm not sure of all of the details (eg whether the new
one needs a new EIN, etc.).

-----Original Message-----
From: John R. Munn [mailto:jmunn1@nycap.rr.com]
Sent: Monday, April 14, 2003 11:56 PM
To: The Club Cafe
Subject: Re: club_cafe: Departure Rules


Ira...

I thought there is a stipulation in the IRS code that requires a
partnership to dissolve if more than half of the partners leave in a tax
year. If I get a chance, I'll see if I can't find the section of the
code before the end of the week. I fully understand your punchiness!

John Munn

IraS1@aol.com wrote:

> >>Are there any rules or restrictions on the amount of members
> that can leave a club (partnership) in a single year?
>
> Yes. You can't have more members leave than were in the club to begin
> with.
>
> Ira Smilovitz
> (sorry if I'm a little punch drunk with 24 hours left in tax season)


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John Medio said....

<<
Generally, under IRC 708, if more than 50% of the interests in the
partnership are sold or exchanged, the partnership will experience a
technical termination. That means the partnership's tax year is deemed
to have ended on the date of the exchange, and the resulting partnership
is a "new" one for tax election and attribute purposes.
>>
A partnership withdrawal is not considered a sale or exchange, even if a
new partner contributes money and is issued units.
Rev Rul 75-423 , 1975-2 CB 260 .

All of which is to say that a partner's withdrawal will not trigger a
termination, and Ira is right again <g>.

Rip