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Accountant / Tax (Sort of) Question... Just checking here...

Old 01-16-2016, 04:54 PM
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Question Accountant / Tax (Sort of) Question... Just checking here...

I'm being told the answer is "yes"... but thought I'd run it by here... PMs are cool if you'd rather go that route:

Two people own an investment property together. (Both on deed).
One person doesn't want to bother or be involved with the property (they don't want to manage it, they don't care about profits or losses from the property... they simply don't want to be involved).
Although the logical thing to do would be to simply have the one person do a quit claim deed and carry on... but for a long, drawn out reason, this isn't an option - the deed must remain as is.
Can they craft a partnership agreement granting one person 100% of the managing control as well as assign all liability, income, losses, etc. to that same person?

Thanks,
Pete
Old 01-16-2016, 05:28 PM
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You need a CPA and a lawyer to draft the agreement. Section 704 is your friend.
Old 01-16-2016, 06:45 PM
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Originally Posted by Trollin4Tuna View Post
You need a CPA and a lawyer to draft the agreement. Section 704 is your friend.



Partnerships are VERY TRICKY, as one of our seminar speakers told us years ago "you can get a divorce CHEAPER than you can get rid of a Partner". LOT of truth in that statement



I do some partnerships and most all of them you walk on egg shells and most end with hard feelings because they are not set up with an exit plan

ALWAYS seems like one partner does more than the other (others) . I am in one myself that I wish I could get out of LOL
Old 01-16-2016, 07:01 PM
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lease the others half for a dollar
Old 01-16-2016, 07:47 PM
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Not an issue of one partner doing more... In fact it is understood that one partner will do it all.

I'm trying to find out if, generally speaking, what I'm asking can be done... If done correctly?
Old 01-16-2016, 07:50 PM
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Originally Posted by OldPete View Post

Can they craft a partnership agreement granting one person 100% of the managing control as well as assign all liability, income, losses, etc. to that same person?

Thanks,
Pete
Yes, it's called a "Purchase Agreement".
Old 01-16-2016, 07:54 PM
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Possibly a Notice of Petition we did it with a partner on a commercial property , our partner wanted out of the partnership
Old 01-16-2016, 07:55 PM
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Sounds like your partner is going to "gift" his interest to you. If 2 people put property of equal value into a partnership the capital accounts which represent the fair market value of the the contribution of the property should be set up in their name. Future allocations of income and loss is allocated to the partners in accordance with the partnership agreement. The allocation is required to have substantial economic effect. What you are describing does not appear to meet this requirement.

Have them gift you their interest. You don't want to make this more complicated then it needs to be.
Old 01-16-2016, 08:21 PM
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Originally Posted by storytime View Post
Sounds like your partner is going to "gift" his interest to you. If 2 people put property of equal value into a partnership the capital accounts which represent the fair market value of the the contribution of the property should be set up in their name. Future allocations of income and loss is allocated to the partners in accordance with the partnership agreement. The allocation is required to have substantial economic effect. What you are describing does not appear to meet this requirement.

Have them gift you their interest. You don't want to make this more complicated then it needs to be.
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