Edsel Posted September 3, 2019 Report Share Posted September 3, 2019 I will begin with a narrative facing a situation with which I am not very familiar - and someone please tell me if and when I am wrong. A 10% partner sold her share effective 1 minute after midnight on January 1. The intent was to receive a K-1 with zeroes in ordinary income for the calendar year. The partnership, however, had inventory on 01/01/18 left over from 2017. Using fictitious numbers, $60,000 in inventory. During 2017, the cost of sales was 66.67%, meaning that the $60,000 would generate $90,000 in sales and $30,000 in margin, before operating expenses, which were 15% of sales. The inventory would thus generate $90,000 minus $60,000 minus $13,500, or $16,500 in ordinary income. If I understand the rules for issuing the K-1, this shareholder would still receive 10% of the $16,500 in ordinary income, or $1650 on her K-1. Does this sound correct? Thanks in advance for responding. Quote Link to comment Share on other sites More sharing options...
Lynn EA USTCP in Louisiana Posted September 3, 2019 Report Share Posted September 3, 2019 $1650 x % of # of days of ownership in the year =~ $4.52. Do the special date allocation section of the k-1 input. 5 Quote Link to comment Share on other sites More sharing options...
Edsel Posted September 4, 2019 Author Report Share Posted September 4, 2019 Thank you Lynn for your response, and correction. Edsel... Quote Link to comment Share on other sites More sharing options...
grandmabee Posted September 9, 2019 Report Share Posted September 9, 2019 But was there any Sales in the one minute before she sold her shares? so wouldn't beginning & ending inventory be the same and zero, Quote Link to comment Share on other sites More sharing options...
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