topic Re: partner buyout in Get your taxes done using TurboTax

partner buyout

btpfs — Wed, 11 Feb 2026 10:22:07 GMT

question (and assume following figures):

LLC with 3 partners.

at end of year:

partner 1 capital account is -$100,000

partner 2 capital account is -$100,000

partner 3 capital account is +$50,000

partner 1 buys out partner 2 and 3 (for $0 - just to relieve them of debt).

partner 2 and 3 walk away with $0.

for LLC return balance sheet, do you simply re-class the capital accounts and make partner 1 capital account -$150,000?

Re: partner buyout

Mike9241 — Thu, 08 Aug 2024 02:55:44 GMT

seek professional help. Once partner 1 buys out partner 2 and 3 and assuming there are no other partners, there is no more partnership. a short period return is/was required to be filed within 2 1/2 months of the date the partnership terminated.

Re: partner buyout

btpfs — Thu, 08 Aug 2024 03:15:24 GMT

Sorry, this is taxed as an S-corp...

So what to do about the capital accounts?

2 and 3 = 0 and 1 = -150,000?

Re: partner buyout

Mike9241 — Thu, 08 Aug 2024 16:22:21 GMT

they get move to treasury stock. Your capital account is not affected. WARNING, since we know nothing about the S-Corp there's no way to know if there are any tax consequences to you, the S-Corp or the departing shareholders.

Re: partner buyout

btpfs — Thu, 08 Aug 2024 17:08:41 GMT

so partner 2 and 3 go to $0 for ending capital accounts and then -$50,000 goes to treasury?

where is this on an s-corp tax return balance sheet?