rental property

[mgmkd1952]

Where do I show $30, 000 that 2 partners paid to buy out the 3rd partner?

[AliciaP1 · Accepted solution]

That is reflected in your basis of the property, not as income or expense to any of the partners.

[AmeliesUncle]

Is this on a Partnership return (Form 1065)?  Or was each partner reporting their share of the rental on their personal tax return (page 1 of Schedule E, of their Form 1040)?

[mgmkd1952]

each partner Schedule

[mgmkd1952]

SCHEDULE E

[ZoltanB45]

When 1 partner buys out another, it does not affect the 1065. It will be reported that there were changes to ownership percentages and the partner that paid the money will have it reflected in his or her basis.

On a side note, we aren't saying the transaction is not a taxable event. The individual who sold their share will treat the payments they receive, less their tax basis, as a capital gain or capital loss.