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"Treasury Stock" in a partnership
A partnership that I'm working on had a few partners sell their interest and part of that interest was sold back to the partnership. Is this allowed? Doesn't it need to flow thru to something?
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The leaving partner's remaining capital account gets distributed among the remaining partners. (IRC 704 presumably tells you how; I don't know off the top of my head.) This is one of the reasons that capital accounts don't represent outside basis.
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