Analysis Of The Uniform Partnership Act Of 1997

1756 Words 8 Pages
There is something to be said about with whom a person goes into business. In the 1980’s, my brother and two friends formed a partnership doing surveying in Colorado. Shortly after getting established, the two friends ousted my brother and took all of the money. There was an IRS audit in which a gain was determined, and my brother was included in the assessment. He quietly paid it, then one day, he received all of his money back; his “friends” paid the assessment not knowing it was paid. We never figured out why my brother got the refund instead of them, but we were not going to look a gift horse in the mouth. This scenario raises a few questions about how the partnership was formed and what the partnership agreement may have included or …show more content…
They will hammer out all of the details, including company name, and record them in a document called a partnership agreement. The partnership agreement is so important that Congress passed the Uniform Partnership Act of 1997 (UPA 1997) to serve as a default partnership agreement for partnerships that did create a partnership agreement, or created a partnership agreement that did not include all of the provisions enacted by law. The State of Texas has passed its version of the UPA 1997 in the Business Organizations Code (BOC). If it is difficult coming to a consensus while drawing up the agreement, it is recommended that an experienced partnership attorney be retained to draw up the partnership …show more content…
It would be easy if each partner had cash they could pool and divide it that way, but it’s not the only way. Contributions can include assets, such as cash, inventory, vehicles, furniture, and computers. Each owner’s capital account should be credited with the fair market value (FMV) of the assets, and the appropriate asset accounts are debited. After everything is recorded, the owners must decide how to allocate the initial contributions among the owners, if they desire. For example, if 3 owners each contributed about one-third of the net assets; they may decide that because of the expertise that one owner has, he will receive a 50% share, while the other two owners own 25% each. The accounting records will be adjusted to reflect 50:25:25. The next accounting decision is how will period profits and losses be allocated, which can be different than the contribution allocation, and it can be simple or

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