Question 1

A partnership has two partners, A (50%) and B (50%). Partner A sells their interest to C. The partnership terminates under Section 708(b)(1)(B) (technical termination) - Note: This rule was repealed by TCJA for tax years beginning after 2017. Assuming the question refers to a 'technical termination' under pre-TCJA or a state that decouples, or simply asks about current law termination: Under CURRENT federal law (post-TCJA), does the sale of 50% interest trigger a technical termination?

Accepted Answer

1. Identify Topic: Partnership Technical Termination.
2. Identify Law Change: TCJA (2017) repealed the rule that terminated a partnership upon sale of 50% or more interest.
3. Current Rule: Partnership continues unless no part of business is carried on or only one partner remains.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Applying the old 50% rule.

How to approach this question

Full Answer

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