RE: Hot assets
I'm not sure I would classify anything as a "hot asset". There was a good amount of inventory and raw material at the time of the buyout, but the old partner received a large amount of the stock in addition to the monetary buyout. There were also accounts receivable, but the old partner had moved to another state and was incapable of assisting with ongoing/incoming projects. So, he conceded any claim to profits from any projects in which he wasn't directly involved.
RE: Book Value, Basis
This is a very small side/start-up business---The new partner was basically an angel investor because the old partner had pretty much become dead weight. The valuation at the time was around $15K. The new partner bought the old partners shares (valued at about $7500) for $3500. The former partner never made any capital contributions but I contributed approximately $4000 out of pocket. I wasn't really considering changing the basis because the valuation is so low right now.
