J
Joshw
Guest
What is the name of your state? NJ
We are an LLC taxed as a partnership. We have recently signed an agreement to repurchase a retiring partner's interest in the company for a stated amount which is in excess of the interest's prorata share of the companies net assets.
The agreement specifically states that the company is purchasing the entire interest in the company of the partner for the stated amount.
Is the entire amount paid treated as capital gains for the retiring partner or a portion attributed to ordinary income? Also, how would this transaction be recorded on our company books?
Thanks for any help in this matter!
We are an LLC taxed as a partnership. We have recently signed an agreement to repurchase a retiring partner's interest in the company for a stated amount which is in excess of the interest's prorata share of the companies net assets.
The agreement specifically states that the company is purchasing the entire interest in the company of the partner for the stated amount.
Is the entire amount paid treated as capital gains for the retiring partner or a portion attributed to ordinary income? Also, how would this transaction be recorded on our company books?
Thanks for any help in this matter!