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Level 1

Can a general partner donate a truck to the LLP?

One of my clients is a general partner. He  already contributed capital. Can he also contribute a truck? Would that affect his share of the partnership?

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Level 15

Can a general partner donate a truck to the LLP?

Yes he can, how the partnership treats the donation is something y'all will have to work out.

There are two options

 

1. the fair market value (FMV) of the truck is the cost basis for the new fixed asset account, and the offsetting account is partner equity investment.  This would increase his equity, whether or not that changes the distribution percentage of profit/loss would depend on the written requirements in the partnership agreement.  Some partner ships distribute profit based on the end of year equity positions, others have a set percentage per partner regardless of equity position.

 

or

 

2.  The FMV of the truck is posted to donation income again using the new fixed asset truck account as the offset.  If the business is a 501(c)3 non profit, then he business would give the partner a donation receipt and he can use that valuation as a charitable deduction on his personal income tax filing

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