A partnership comprised of four siblings owned a rental house which had been rented out from 1990-2007. One of the partners moved into the house in 2008 and lived there for five months until it was sold in March of 2009. The proceeds from the sale went directly to him because he had spent his own money to fix up the house while he was living there so the other siblings said he could have all of the proceeds. However, he wanted to give each of them a portion of the proceeds so he sent each of them a share (as you probably guessed, there is no partnership agreement). I know each partner's K-1 will show their share of the gain on the sale but what detail would need to be shown on their respective capital accounts on the partnership return for the above details? Also, I am not sure how to treat the amounts the one partner paid out of his pocket for repairs and improvements of the rental house. This will be the final 1065 filed.
I am not an expert in partnership taxation so any help you can give is very much appreciated!
I am not an expert in partnership taxation so any help you can give is very much appreciated!