Liquidating distribution from partnership
This PARTNERSHIP AGREEMENT is made on ____________, 20__ between __________________________________________ and __________________________________________. The principal office of the business shall be in _______________________. Upon the demand of either partner, the capital accounts of the partners shall be maintained at all times in the proportions in which the partners share in the profits and losses of the partnership. A separate income account shall be maintained for each partner. The partners shall have equal rights in the management of the partnership business, and each partner shall devote his entire time to the conduct of the business. All funds of the partnership shall be deposited in its name in such checking account or accounts as shall be designated by the partners. The partnership books shall be maintained at the principal office of the partnership, and each partner shall at all times have access thereto. The partnership name shall be sold with the other assets of the business. Upon the death of either partner, the surviving partner shall have the right either to purchase the interest of the decedent in the partnership or to terminate and liquidate the partnership business. The parties hereby form a partnership under the name of __________________________________________ to conduct a __________________________________________. The partnership shall begin on ________________, 20____, and shall continue until terminated as herein provided. Neither partner shall withdraw any part of his capital account. The net profits of the partnership shall be divided equally between the partners and the net losses shall be borne equally by them. The partnership may be dissolved at any time by agreement of the partners, in which event the partners shall proceed with reasonable promptness to liquidate the business of the partnership.
The authors of the initial UPA debated whether in theory a partnership should be treated as an aggregate of individual partners or as a corporate-like entity separate from its partners.
As the regular English courts gradually recognized the societas, the business form eventually developed into the common-law partnership.
England enacted its Partner-ship Act in 1890, and legal experts in the United States drafted a Uniform Partnership Act (UPA) in 1914. When there is a positive agreement at the commencement of the partnership, that the personal representative or heir of a partner shall succeed him in the partnership, the obligation will be considered valid.
If a partner has no credit balance in his income account, losses shall be charged to his capital account. Each partner may, from time to time, withdraw the credit balance in his income account. (a) If the surviving partner elects to purchase the interest of the decedent in the partnership, the purchase price shall be equal to the decedent's capital account as at the date of his death plus the decedent's income account as at the end of the prior fiscal year, increased by his share of partnership profits or decreased by his share of partnership losses for the period from the beginning of the fiscal year in which his death occurred until the end of the calendar month in which his death occurred, and decreased by withdrawals charged to his income account during such period.
No allowance shall be made for goodwill, trade name, patents, or other intangible assets, except as those assets have been reflected on the partnership books immediately prior to the decedent's death; but the survivor shall nevertheless be entitled to use the trade name of the partnership. Any controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be settled by arbitration in accordance with the rules, then obtaining, of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof.
However, while partnership distributions are not subject to the provisions of Sec.