Nilodop wrote:I'm confused but what's new about that?
The "new" partnership's "ownership" is what requires it to be accrual method? Is one of the new partners a C corp.? Is there an ongoing business being contributed by the C corp., or just cash.
Is this the scenario? The existing cash method partnership (OP's client) contributes its business's assets, including the zero basis receivables, and the C corp. contributes cash, thus forming a "new" partnership that has a C corp. as its partner? If so, assuming no exceptions apply, then as you say they may not use the cash method.
But might the "new" partnership in those facts be viewed as the existing partnership with just a new C corp. partner, so in substance being the same partnership, thus requiring a change in method? Because they'd have the same result if they structured a straight capital contribution under 721 by the C corp. to the existing partnership, thus requiring the existing partnership to change method.
Just askin'.
Here's an article. May or may not be "the" article. Have not read it. https://www.crowell.com/files/20180613- ... ethods.pdf.
OK, read it. That's the article.
HenryDavid wrote:Not a continuation of an existing or old partnership (if I understand, there was no prior partnership). Is the new partnership a new business? Adding a new accrual basis partner to the business seems like a very significant change, how is it the same business?
Users browsing this forum: CoastalCPA, dsocpa, golfinz, Google [Bot], Google Adsense [Bot], IDunnoItDepends, JAD, JoJoCPA, JR1, ManVsTax, MAPCPA60, missingdonut, Nightsnorkeler, Nilodop, NorthCAEA, sjrcpa, TaxCut, TAXMASTER, taxtothebest, zl28 and 194 guests