Liquidating trade

The basis of property received in complete liquidation of a partner's interest is the adjusted basis of the partner's interest in the partnership, reduced by any money distributed in the same transaction.Thus, the partner's basis in the property can never be greater than the partner's basis in the partnership.Over the last decade, a number of firms have been established to provide trustee services in addition to trust departments of banks.

Such gain or loss is measured by the difference between the fair value of the liquidating distribution and the owner's adjusted basis in the corporation.Such agreement provides for trustee duties, compensation of trustees, and governance as well as distributions and other administrative matters.The liquidating trust normally has a lower cost structure than the existing fund and is managed on an "as needed" basis by the trustee as opposed to a full-time basis for the fund.Upon the deemed contribution of the assets to the liquidating trust, the trust will have the same adjusted bases in its assets as the partners had in those assets immediately prior to the transfer to the trust.

Conclusion As noted, the use of a liquidating trust may be a cost efficient method to liquidate certain assets.

Also, if the time period is unreasonably prolonged, the status of the entity may change from a liquidating trust.