club_cafe: Departure Rules

iras1 on

In a message dated 04/15/03 10:24:55 AM Eastern Daylight Time, rip@montrose.net writes:

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

Thanks Rip. I actually had on my "to-do" list to hit the library and review the regs at 1.708 as I wasn't certain if a withdrawal was equivalent to a "sale or exchange".

Ira Smilovitz

Mail