What are tax implications of selling shares of a partnership to my spouse?

[jimj]

I invested $10,000 in a partnership but due to a conflict of interest, I need to withdraw from the partnership. I get a Schedule K-1 yearly from this partnership. 

If I sell my shares to my spouse for $1, what are the tax implications? The remaining capital in the partnership is around $5000. Since we file jointly, does the loss and gain cancel one another out?

[TaxGuyBill]

How many total partners are there?  Is your spouse one of them?

You wouldn't really 'sell' your Partnership Interest to your spouse for $1, that is essentially a "gift".

[SweetieJean]

Do you live in a Community Property State?

[jimj]

There are 450 partners total. My spouse is not a partner currently. We are in a Community Property State.

[TaxGuyBill]

I don't see any gain or loss.  You are just gifting the Partnership Interest to your spouse.

As a side note, does your spouse owning it avoid the "conflict of interest"?  Depending on what the "conflict of interest" is, transferring it to your spouse may not avoid it.

[SweetieJean]

Does the Partnership Agtreement contain any type of buyout provision which (for example) gives the remaining partners a right of first refusal?

[jimj]

Ok, this helps. And because it's below the $14,000, there's no Gift Tax right? Transferring ownership to my spouse avoids the "conflict of interest" in our case. And the remaining partners have already agreed to this transfer. We just wanted to check on any tax implications as a result of this transfer. Thanks for answering my questions so quickly TaxGuyBill and SweetieJean. I really appreciate it!

[SweetieJean]

No gift tax ever for transfers berween spouses.

[SweetieJean]

Solved in comments.