Question

On January 3, 2010, the partners' interests in the capital, profits, and losses of Able Partnership were

% of capital profits and losses

-Dean: 25%
-Poe: 30%
-Ritt: 45%

On February 4, 2010, Poe sold her entire interest to an unrelated person. Dean sold his 25% interest in Able to another unrelated person on December 20, 2010. No other transactions took place in 2010. For tax purposes, which of the following statements is correct with respect to Able?

a) Able terminated as of February 4, 2010.
b) Able terminated as of December 20, 2010.
c) Able terminated as of December 31, 2010.
d) Able did not terminate.

Answer 1

d) Able did not terminate.

Step-by-step explanation:

The partnership did not terminate. Poe and Dean leave the partnership but these transactions require the approval of the other partners.

Dean and Ritt agree to let Poe sale his share.

This new partner and Ritt agree to let Dean sold his participation. The Partner does not terminate. It moves on with the new partners.