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• All partners who originally assumed personal
liability for a portion of the partnership debt
during the first year of the partnership --
whether they are now determined to be active or
inactive partners -- will be assigned a share of
the lower amount of recognized partnership debt
described above. Each partner’s share will be the
exact same percentage as his/her share of the
partnership debt originally assumed.
* * * * * * *
• Inactive partners are deemed to have liquidated
their respective partnership interest when they
abandon it, according to the following guidelines:
" The amount realized by partners on the
liquidation of their partnership interest
will be the amount of the assumed liability
for which they remained liable when they
abandoned their interest in the partnership.
This amount is the partner’s share of the
lower recognized partnership debt described
above.
" The deemed liquidation of partnership
interest by inactive partners will occur on
December 31 of the year they become inactive,
as described above.
• In computing “At Risk,” active partners are
entitled to include their prorated share of
partnership debt which was previously attributable
to inactive partners for purposes of “At Risk” and
basis. Active partners assume this additional
debt on the date an inactive partner is deemed to
have liquidated his/her partnership interest, as
described in the immediately preceding paragraph.
• Profits, losses and credits -- after considering
Mr. Hoyt’s share -- are allocated strictly on the
basis of capital account. This means that each
partner’s interest in the credits, profits and/or
loss is calculated annually by comparing the
partner’s capital account to the aggregate of the
capital accounts of all partners in the
partnership.
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