Partnership admitted a new partner with a 20% P/L/E stake for $15M. The $15M is considerable higher than 20% of the capital of the partnership. In the past I would have balanced the partners capital accounts with the additional bonus, so if for example the partnership had to capital of $25M immediately before the admission the capital accounts would reflect 16M / 16M / 8M immediately after to represent the 40 / 40 / 20 split.
Now I am wondering if the same procedure should be followed since the capital accounts are reported on the a tax basis?
Any other advice on how to handle this situation, with a new partner admission and large capital investment in partnerhsip?