Thank you for the help!
To simplify things, stripping the tax aspect of the question....
If two equal partners in an LLC each have $50,000 in their capital account and one partner sells to the other at an agreed upon valuation of $500,000 for the 50%. Does the selling partner receive $500,000 for the FMV of their interest AND the $50,000 in their capital account?
If the $500k valuation is based on the go-forward earnings of the business... the valuation is going to be $500k whether the partner takes out his $50k or leaves it in the business.
We are trying to determine if the selling partner should walk away with $500k or $550k.
