Liquidating a partnership

The fair value of the contribution to the liquidating trust would represent the new owner's basis in the liquidating trust.Similarly, in the case of a liquidating distribution from a partnership, the business assets are deemed to have been distributed to the partners and transferred to the liquidating trust.However, as with new legal entities, fund managers should consult with tax advisors before embarking on a liquidating trust to make sure that this type of entity makes sense for the situation.Garth Puchert, Audit Partner of Eisner Amper's Financial Services Group, is primarily devoted to private equity funds, registered investment companies, investment advisors, mutual funds, hedge funds and broker-dealers in securities.The trustee takes control of the newly formed liquidating trust.The role of the trustee of the liquidating trust is to administer and manage the liquidating trust, sell assets, pay creditors, resolve any claims and distribute any available funds to the beneficiaries of the trust.The basis of property received in complete liquidation of a partner's interest is the adjusted basis of the partner's interest in the partnership, reduced by any money distributed in the same transaction.Thus, the partner's basis in the property can never be greater than the partner's basis in the partnership.

At the end of the fund's life cycle or term, the fund manager may have certain assets that are not easily liquidated and convertible into cash for distribution to the owners of the fund.Over the last decade, a number of firms have been established to provide trustee services in addition to trust departments of banks.A liquidating trust is generally considered a grantor trust for tax purposes.Download PDF When "Liquidating Trust" is mentioned, most people associate this with bankruptcy.In a bankruptcy, a liquidating trust may be formed whereby certain assets are placed in a trust for the benefit of creditors who may have certain claims against those assets.

liquidating a partnership-18liquidating a partnership-43liquidating a partnership-56

Join our conversation (95 Comments).
Click Here To Leave Your Comment Liquidating a partnership.

Comments:

Leave a Reply

Your email address will not be published. Required fields are marked *