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contributed to the partnership at an agreed value of $59,455.
The shareholders also transferred their share of the
corporation's receivables to the partnership. These assets were
contributed to the partnership (less liabilities assumed by the
partnership) in exchange for the opening balances of the
respective partnership capital accounts of Messrs. DeMarta and
Norwalk. The partnership did not assume tax obligations of the
corporation, nor did it assume the debts owed by the corporation
to the shareholders. The opening capital account balances in the
partnership for Messrs. DeMarta and Norwalk were $39,202 and
$28,041, respectively.
Messrs. DeMarta and Norwalk each executed a partnership
agreement when they joined the partnership. Under the terms of
the partnership agreement, Messrs. DeMarta and Norwalk were
treated as equal partners and subject to the same formula for
allocation of compensation. This partnership agreement also
contained certain provisions restricting the partners' ability to
compete with the partnership.
The partnership assumed the corporation's lease and occupied
its former offices from July 1, 1992, to April 25, 1994. On
April 28, 1994, after vacating these offices, the partnership
subleased the space. At the time of the sublease, the remaining
term of the lease was 8 months. The partnership subsidized one-
third of the rent when it subleased the space.
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Last modified: May 25, 2011