Dissolved LLC Partnership in April 2023

Forum|Forum|2 years ago
January 16, 2024
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My partner and I ended our LLC partnership in April of 2023 she didn’t submit the paperwork until Sept. There’s been no buy out b/t us, I still have the business and she wanted out. When filing taxes this year how do I need to go about it? We normally have an accountant but I’m not too trusting of her in the past. Would small business online turbo be better or is buying it in store the way to do. The business does still owe former partner some cash as she purchased inventory for the business.

Not A Product Question

Best answer by Carl11_2

I still have the business and she wanted out.

Basically in a nutshell, a partnership/multi-member LLC requires a minimum of two owners/partners in order to exist. If you are the only remaining partner/owner (and the business did not elect to be treated as a corporation for tax purposes) then the partnership is completely closed/dissolved and all inventory and assets must be disposed of entirely - including any remaining cash as well as any outstanding dept.
Then, if you will keep the business as a sole owner, you open a new business as a sole proprietor, single member LLC or corporation. You can not use the same EIN as the partnership did either, and may need to get a new EIN for the new business.

Carl11_2Answer

Employee

I still have the business and she wanted out.

Anonymous_

Employee

@LOBoutique wrote:

...We normally have an accountant but I’m not too trusting of her in the past. Would small business online turbo be better or is buying it in store the way to do. The business does still owe former partner some cash as she purchased inventory for the business.

You need to consult with a local tax professional.

See https://taxexperts.naea.org/expertdirectory

AmeliesUncle

I agree with Tagteam - the ending of a Partnership REALLY should be done by a tax professional that is experienced with Partnerships.

And did you file an extension for the Partnership? If it ended in April or September, the tax return is already late. Yet another reason why you should find a good tax professional that is experienced with Partnerships.

As Tagteam implied, if you don't trust your prior accountant, you may want to look for a new one. Asking your friends and family is probably the best way to find a 'good' one (ask WHY they like their tax professional), but otherwise you may need to call around to find one.

Rick19744

Employee

In addition to what has been stated:

Partnership tax gets complicated very easily and quickly and can be a trap for the unwary. You need professional advice here.
Hopefully you both have been maintaining your tax basis in the partnership. This is a critical component.
Since you had a liquidation of the partnership, the tax implications will depend on (1) your tax basis, and (2) what was distributed in a liquidating distribution.
When you have property distributed in a liquidating distribution, determining the basis in that property will be determined by specific steps outlined in the regulations.
And as @AmeliesUncle stated, you may already be facing late filing penalties if no extension was filed. While the penalty may be able to be abated, get a professional involved who understands this area.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.