I am trying to understand the impact of a 2 Member Partnership becoming a disregarded entity (sole p.) because one owner acquires all interest in the company but I cannot find the answer
The impacts in question are:
1) if the assets, liability are staying with the company then does the balance sheet need to be zeroed out on 1065 final?
2) concern for (q1) is that zeroing out implies distributions. Is there technically distributions to report on K-1 even though the assets and liabilities are staying with the company (at the state level)?
3) does the answer to (1) or (2) change if there is outstanding non-recourse
4) is it a liquidation for reporting purposes, and does this imply distributions?
5) does the final business owner receive a final K-1 reflecting adjustments to capital account, distributions, or other fields on the k-1 as a result of acquiring remaining interest?
6) if distributions are reported merely as a technicality (clarify if they are not) does this constitute a disposition from the partnership to the disregarded entity and thereby requiring special forms
7) if a negative capital account is reflected in any of the various situations, does this result in gains reported on 6198 and gross income?
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A number of things are impacted here and depending on the $$ involved, you may want to consult with a tax professional. I will provide some direction and comments here:
A number of things are impacted here and depending on the $$ involved, you may want to consult with a tax professional. I will provide some direction and comments here:
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