21 July 2022
In a partnership firm, one partner is reducing its share by 8% from 33% to 25% & other partners are acquiring the same. Total Capital of Firm as on date of transfer - 170000/- Capital of partner with 33% as on date - 114000/-
Will there be an internal entry to be passed for the said exchange of shares (If yes, then at what value ? Is there will be any tax to the partner or Firm ?
22 July 2022
Yes, pass entry on their respective capital accounts. Capital gains tax applicable only at the time of leaving the company. Partner buying the share should pay for it to the seller.
22 July 2022
At what value of consideration ? Total Capital of Firm as on date of transfer - 170000/- Capital of partner with 33% as on date - 114000/-
22 July 2022
Is there any payment between the partners for the change in partnership holding. How total share capital is 170000 and 33% share is 114000.
22 July 2022
Transfer of funds will not happen. Its only for the BOA.
Valuation of firm as on date is 170000/- , but as other partners have overdrawn as per books, the capital of 1 partner who is reducing the share has capital balance of 114000/- as on that date.
No one is paying a single rupee. this will be adjusted through a JV. So 8% share amount will be received by 1 partner & given by rest of the partners in acquiring ratio through JV.
So question is 8% will be of 170000/- i.e., 13600/- or reverse calculation based on 114000/- for 33% means 345454/- of which 8% comes to 27636/-. Which one should be used ?
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