Our partnership agreement places a partner's valuation date
at the end of the month following the month the withdrawal
notice is accepted. For instance, if a partner's withdrawal
notice is accepted at the November 2023 meeting, then the
partner's valuation date is December 31, 2023. Our
partnership agreement states that we can make a partner's
full withdrawal payment in cash equally over 3 months
following full withdrawal.

On the withdrawal screen the valuation date becomes December
31, 2023, and the transaction date must be after this date
for instance, January 9, 2024. The partner will be paid in
January, February, and March 2024, the following year.

Questions:
1- Does the 2023 partnership return still show the
withdrawing partner with a tax basis at the end of 2023?
2- Will the partner receive a K-1 from the partnership in
2024, as well as 2023?
3- Does the partner report their gain or loss on their
personal tax return in 2023 or 2024?

Good morning

2023 is closed from an accounting point of view unless you
restore your records from a backup. Did you post a complete
withdrawal for the partner on 12/31/23? Examining a member
status report dated 12/31/23 should show you who remained as
a partner at the end of the year. One can also generate a
member tax allocation report for 1/10/24 and see if the
withdrawing partner is listed. If they are then they will be
included in the 2024 return & receive a K1 in 2024.

I hope that helps
scott

scott

Elizabeth:

The exact wording of your partnership agreement is important here. If the
agreement provides that the person stops being a partner on the last day of
the month, then the person has no ownership interest in the partnership on 1
January. A person stops being a partner when they can no longer vote or be
held liable for the debts of the partnership. This date may even be prior to
the valuation date depending on the wording of the partnership agreement. In
the case of my club, the person stops being a partner on the date we accept
the resignation. Valuation and withdrawal occur later, but the relationship
between the departing person and the partnership becomes one of creditor and
debtor.

The fact that the partnership may pay out over three months means the person
is a creditor of the partnership during that time. As a creditor, the person
would not receive a K-1 for 2024 and the gain or loss from leaving the
partnership would be reported in 2023.

If in fact the person stopped being a partner in 2023 and the software won't
allow the valuation date and withdrawal date to be the same, I would enter
30 December as the valuation date as the stock values will be from the
market close on the previous Friday regardless of whether 30 or 31 December
is used. Then using 31 December as the withdrawal date should result in no
transactions for 2024 that would trigger a K-1.

For accounting purposes, the partnership would post the debt owed the
departing person as a liability, which would be reduced with each monthly
payment. I have a couple of ideas on how to make bivio handle that, but
suggest you request assistance from bivio support.

If the wording of your partnership agreement has the departing person
remaining an owner after the valuation date, then none of the foregoing
applies, and the person is still a partner in 2024. They would be included
in the 2024 tax reporting with a K-1, all be it with no income.

Cheers, Jack




-----Original Message-----
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Elizabeth A.
Smith 6/97 via bivio.com
Sent: Wednesday, 10 January, 2024 01:05
To: club_cafe@bivio.com
Subject: [club_cafe] Question about withdrawal of a partner, tax return, and
K-1

Our partnership agreement places a partner's valuation date at the end of
the month following the month the withdrawal notice is accepted. For
instance, if a partner's withdrawal notice is accepted at the November 2023
meeting, then the partner's valuation date is December 31, 2023. Our
partnership agreement states that we can make a partner's full withdrawal
payment in cash equally over 3 months following full withdrawal.

On the withdrawal screen the valuation date becomes December 31, 2023, and
the transaction date must be after this date for instance, January 9, 2024.
The partner will be paid in January, February, and March 2024, the following
year.

Questions:
1- Does the 2023 partnership return still show the withdrawing partner with
a tax basis at the end of 2023?
2- Will the partner receive a K-1 from the partnership in 2024, as well as
2023?
3- Does the partner report their gain or loss on their personal tax return
in 2023 or 2024?