I have been informed that one partner in a two partner partnership passed away on August 1st of this year. The remaining partner converted to a sole on October 3rd. Since the conversion was in October can I extend the short year return or is the partnership terminated upon death which would entail penalties for not filing by the 15th day of the third month.
This is the note that I received from the client. Trying to get them in here for a face to face but apparently the remaining partner had an accident requiring surgery.
We were told by Albany County that the partnership upon death ended. Bill went down to the county clerk’s office and amended the paperwork to remove Kelly’s name. Also, Kelly did not have a will so there was no directive as to his portion of the business. Bill is working with Kelly’s wife Patti as he thinks that the appropriate thing to do is purchase Kelly’s interest in the equipment as Patti stated she had no interest in the business.
Also, the EIN never changed for the business.
@lbones wrote:
We were told by Albany County that the partnership upon death ended. Bill went down to the county clerk’s office and amended the paperwork to remove Kelly’s name.
Also, Kelly did not have a will so there was no directive as to his portion of the business. Bill is working with Kelly’s wife Patti as he thinks that the appropriate thing to do is purchase Kelly’s interest in the equipment as Patti stated she had no interest in the business.
How it is registered with the county or state has very little to do with how it is treated on the Federal tax return. If more than one person owns the business (even if the county or state thinks otherwise), it is still a Partnership.
In most cases, no directive means any solely owned property belongs to the Estate (or possibly directly to the spouse). It looks like Bill is trying to "purchase Kelly's interest", which means Bill does not currently own the entire business yet. It is still a Partnership, regardless of what they reported to the county or state.
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