USA LLC (S-Corp) member dissociation - 50% distribution problem for assets

[taxicab]

Hi,
Thank you for reading this post and devoting your time for any answers.

We contributed money to the LLC and purchased two vehicles. They are property of the LLC.
One member dissociates from the LLC this month, Sept 19. After dissociation I should remain with a 50% interest in the LLC. I want to start with the vehicles.

Below is what I have in my books:
FixedAssets\carA\Cost
FixedAssets\carA\Depreciation

FixedAssets\carB\Cost
FixedAssets\carB\Depreciation

Now, upon dissociation I plan to do such entry:
Half of the Cost of carA and carB would be debited to
Equity\Dividends acount of the dissociated member.

Should I do anything with the Depreciation portion fo the books?

Paul.

 

[Marshall]

There are several bits of information missing here. Are there only two members? If so, when one dissociates, you have a disregarded entity not a partnership. That means no capital accounts. You would have a dissolution of the partnership (i.e., LLC) which is generally nontaxable except to the extent of appreciated inventory or receivables.

Is the LLC keeping both vehicles? Are there liabilities?

Please explain a little more.

 

[The Finance Writer]

The reason your question is confusing is that it states you have 50% of the business after dissociation. However, you plan to debit half of the asset value to the departing partner's capital account. That's two halves; so no other part remains.

Are you getting a new partner to join you after the current partner departs? That's the only way you could have 50% after the dissociation.

Marshall is correct if you have 100% after the departure of your current partner.