IANAL, but your last sentence (in brackets) appears to be the relevant
one. The valuation is a /partnership/ expense (therefore comes off
before tax) and will effectively be borne by the partners in proportion
to their shares.
The only question is whether the valuation occurs at the end of the old
partnership (including your retiring partner) or the beginning of the
new one (including the incoming partners). In my practice the latter
has applied, by the time we've got around to sorting things out, and
seems fair insofar as the ongoing partnership has the main benefit. If
you can't get the new partners to agree to that then you've bigger
problems than this!
On 04/09/2009 08:44, Michael Leuty wrote:
> There have been some changes in our partnership recently, and there is
> to be a sale of shares in the practice premises. A retiring partner is
> selling her entire share, remaining partners are selling part of their
> share, and these shares are to be bought by two incoming partners.
>
> We will incur valuation and legal fees during the process, and I
> should be grateful for your opinion on the fairest way of dividing up
> liability for these fees between the partners. I can see three
> possible options.
>
> 1. Divide the fees in the partnership ratios. That would mean that the
> retiring partner would not pay anything.
> 2. Divide the fees equally between all the partners. That would mean
> that the retiring partner selling her entire share would pay the same
> amount as the partner who is only selling a 2% share in the property.
> 3. Divide the fees so that they are proportionate to the share being
> bought or sold (divided by the total percentage being bought and
> sold).
>
> Three looks the fairest to me. Does that sound reasonable, or is there
> a better way?
>
> (The partnership agreement simply says that the cost will be borne "by
> the partnership".)
--
Regards,
Stephen
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