Well, first of all, I give you the obligatory advice not to try to keep everyone equal. Yes, that means converting to a unit system, but you will be so much better off after doing that. Please read the following on the NAIC website.Equal Partners and Why That Doesn't Work - by Herb Barnetthttp://www.better-investing.org/clubs/equal-partners.htmlI assume that I haven't convinced you (I seldom do, until the situation gets so bad that the clubs are forced into unit accounting) Therefore, I will point out a few things for you to consider. There are two ways the partners coming in can be equal. They can (1) contribute an amount equal to each partners worth in the club, or (2) contribute an amount equal to the basis of each partner in the club. Obviously, if your club has done well, the first alternative is preferable. Assuming you do that, their basis will not be the same as the other partners. This is no big deal, if it weren't for the fact that you are not using unit based accounting. You should look to your partnership agreement and see how you allocated gains and losses for the year. Do you do it on the basis of capital accounts? If so, do you define capital accounts? It is very possible, in the absence of unit based accounting and an agreement based on unit based accounting that your income will have to be allocated on the basis of capital accounts (read book value as compared with fair market value).Finally, I would urge you to do everything through the club. That is to say, don't have the new partners pay the outgoing partners directly. Have the new partners make their contributions to the club, and have the club pay off the old partners.This is a very brief recap of the problems involved. I would be glad to go into more detail if you wish.rip
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