Discussion:Reckless Abandon...ment?
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Discussion Forum Index --> Advanced Tax Questions --> Reckless Abandon...ment?
Discussion Forum Index --> Tax Questions --> Reckless Abandon...ment?
| 6 November 2009 | |
| Client is a 50% general partner and 5% limited partner in a Limited Partnership. Client would like to adandon LP interest to take loss, but would like to keep GP interest open in order to allow partnership to stick around. The GP has no capital account so it could be abandoned but it would not generate a loss.
I have not been able to find anything on abandoning limited interest and not the general interest, and it seems fine to me to abandon only the limited interest. Is the abandonment okay, or am I missing something? | |
RoyDaleOne (talk|edits) said: | 6 November 2009 |
| May I ask who would succeed to the abandoned interest, as it is said "this ain't a Corporation?" | |
| 6 November 2009 | |
| The other 45% interest is owned by unrelated limited partners. | |
RoyDaleOne (talk|edits) said: | 6 November 2009 |
| When a partnership interest is abandoned that interest goes to someone per the partnership agreement? To whom does it goes? | |
| 6 November 2009 | |
| You might be interested in reading an article in a law firm's newsletter about the abandonment or worthlessness of a partnership interest. Here's the link: http://wkblaw.com/newsletters/wkblaw_newsletter_08_2008.pdf
The article covers a lot of ground, but doesn't address the specific question you've asked (abandoning limited interest, keeping general interest). However, I would envision that one reason for abandoning a limited interest and not a general interest in the same partnership would be the situation where there is little likelihood that limited partners would receive any distributions whereas if the general interest were abandoned, this might result in income from relief of partnership liabilities. | |
| 6 November 2009 | |
| RoyDaleOne,
The interest will go to the other limited partners. | |
