Capital Gain Tax before or on dissolution of partnership

Due to recession one of the partnership firm is closing down. But partners are worried about capital gain tax on transfer of assets at the time of dissolution. My question is whether firm is liable to pay the CG Tax on such transfers or the same will be divided among the partners. If divided among the partners whether it can be in Profit sharing ratio(PSR)?

Will it be beneficial if the assets are first transferred to partners in their PSR and then firm goes for dissolution?

Basically what can be done to reduct CG tax liablity of either firm or partners. Pls suggest.

Replies (3)

Mr.Dhananjay Nirhali

At the time of dissolution the properties can be taken over by the partners as agreed in the dissolution deed not exactly as per profit and loss sharing ratio.  The registrar of firms will charge stamp duty  as per the prevaiong rates of a particular state on the value of the assets (Immovable property)  so transfered to the partners.

Best Wishes

Sathikonda

at the time of distribution by partnership firm tax will not be charged on firm on account of capital gain but the partners are liable to capital gain tax at fair market value of the assets.

thank you sir,

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