PatriciaV
Expert Alumni

Business & farm

The handling of the situation you described appears to be appropriate. As long as neither partner received distributions in excess of basis, there would be no taxable income. And, yes, the liquidating distribution would be reported on Form 7217.

 

Zeroing out the balance sheet is appropriate for a dissolved entity. When the transactions result in a zero balance sheet, you have confirmation the activity was recorded correctly.

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