Partnership Buy-Out and Taxes

[bbbsites]

If I agree on a buy-out for a partnership I was part of, am I now required to pay taxes on this amount? This was not profit, as the business never showed a profit. Rather, it was basically a payment of my original investment so I could get out and move on. Thank you.

[Mr. Knowitall]

Investment profits are ordinarily subject to capital gains taxes. If you did not profit, but only got your initial investment back, you may not be subject to taxes. However, that may be affected by the nature of the investment or its treatment on past tax returns, so you should check with a tax professional just to be safe.