ManVsTax wrote:Yes. The 743(b) adjustment should affect the inside basis of the transferee, not the transferor. Think about it in the context of a partner who sells his entire interest to another individual and leaves.
I'm skeptical whether you actually have a partner selling his/her interest to a new partner in this fact pattern though? I see a partnership issuing units to a new partner for a cash contribution. The new partner would have no disparity between inside and outside basis immediately after exchanging cash for units and thus there wouldn't be a need for a 743(b) adjustment? Perhaps there's some rule about constructive sales -- I don't know.
Sergeant_Tax wrote:My best guess would be that the preparer covered up the capital account disparity from the prior year, just a hunch.
Sergeant_Tax wrote:If the original partners sold their partial interest then shouldn't there be a transfer of capital line item on the BS? I don't see it.
What is a "743(b) 15 SL"?
My best guess would be that the preparer covered up the capital account disparity from the prior year, just a hunch.
We used to do transfer of capital interest on "other increases" and "other decreases" on the M-2 at a prior firm I worked with. Shows up on the capital account analysis (Item L) on the K-1s too. But again, I think you need to find out if this is really a transfer/sale of interest and if that even matters.
Sounds like the other preparer doesn't have a good grasp on what they're doing. Might be an opportunity for you to pick up the 1065 as a client if you're comfortable with what needs to be done and can articulate that and your value to the owners (I'm assuming at least one of which is your client).
Users browsing this forum: DAJCPA, Google [Bot], kathyt, ManVsTax, mariaku, MilesR, TAXMASTER, Trailman423, Wiles and 155 guests