You thus lose both ownership and control over the trust assets.
If the partnership decides to liquidate, the assets of the partnership are sold, liabilities are paid off, and any remaining cash is distributed to the partners according to their capital account balances.
If a partner's capital account has a deficit balance, that partner should contribute the amount of the deficit to the partnership.
To understand the taxation of partnerships and distributions, it is necessary to know the 2 types of tax bases concerning partnerships.
The inside basis is the partnership's tax basis in the individual assets.
In most parts of the country, even the smallest of income-producing properties will require an investment of at least $25,000.
However, an investment in just one (or a few) properties involves risk because the success of the investment will depend on the successful operation of that one particular property.
However, your outside basis differs from your partner's, since your outside basis is ,000, while that of your partner's is ,000.
If you sold your partnership interest for ,000, you would recognize a gain of ,000, whereas your partner, if she sold at the same price, would recognize no gain.
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