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Curry's sale of her partnership interest causes a partnership termination. The partnership's business and financial operations are continued by the other members. What is (are) the effect(s) of the termination?

1) I only.
2) II only.
3) Both I and II.
4) Neither I nor II.

1 Answer

6 votes

Final answer:

The sale of Curry's partnership interest does not inherently result in a termination of the partnership if the business continues with the remaining partners. The internal dynamics may change, and new partners may join, but it does not mean the business will cease to exist or that it will change entirely.

Step-by-step explanation:

When Curry sells her partnership interest, the occurrence is generally not considered a termination of the partnership entity itself if the business continues with the remaining partners. According to the Internal Revenue Code (IRC), a partnership is considered terminated when there is a cessation of any part of its business by all but one of the partners or a series of sales or exchanges of interests occurs that results in a transfer of 50% or more of the total interest in partnership capital and profits within a 12-month period.

In Curry's case, the partnership's existence does not terminate for business and financial operations purposes. The remaining partners continue the business, possibly under the same name and with the same structure, although they may take on new partners or restructure the entity. The business itself can change with new partners but doesn't necessarily cease to exist. The effects of the termination mentioned in the question (I and II), such as the partnership no longer being valid and the business undergoing changes, are not entirely accurate unless the partnership agreements stipulate that this sale of interest would cause such a change.

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User Daniza
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