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Gleim #: 10.2.43 David Beck and Walter Crocker were equal partners in the calendar-year partnership of...

Gleim #: 10.2.43 David Beck and Walter Crocker were equal partners in the calendar-year partnership of Beck & Crocker. On July 1, Year 1, Beck died. Beck’s estate became the successor in interest and continued to share in Beck & Crocker’s profits until Beck’s entire partnership interest was liquidated on April 30, Year 2. At what date was the partnership considered terminated for tax purposes? A. April 30, Year 2. B. July 1, Year 1. C. December 31, Year 1. D. July 31, Year 1.

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Answer #1

Answer would be A. April 30, Year 2.

Reason:

If one partner in a two-partner partnership dies, the partnership does not terminate provided the estate – or another successor in interest of the deceased partner – continues to share in the profits or losses of the partnership.

If the agreement requires the partnership, rather than the surviving partner, to purchase the interest from the estate, the partnership will not terminate until the estate’s entire interest is liquidated which is April 30, Year 2, in the given case

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