https://www.taxtmi.com/forum/issue?id=2702 Whether an excess payment to a retiring partner is taxable or a capital receipt turns on its characterisation. If the excess is payment for goodwill, it is a capital receipt for the partner and may attract capital gains treatment under s.45; if recorded as revenue, different tax consequences and deductibility issues for the firm arise. The partnership deed and the manner of accounting (revaluation entry, goodwill recognition, or capital adjustment) determine whether the firm may deduct the payment or must capitalise it and adjust partners' capital accounts. en-us Fri, 28 Jan 2011 19:33:06 +0530 Thu, 23 Jan 2025 15:58:25 +0530 TaxTMI RSS Generator https://www.taxtmi.com/forum/issue?id=2702 Whether an excess payment to a retiring partner is taxable or a capital receipt turns on its characterisation. If the excess is payment for goodwill, it is a capital receipt for the partner and may attract capital gains treatment under s.45; if recorded as revenue, different tax consequences and deductibility issues for the firm arise. The partnership deed and the manner of accounting (revaluation entry, goodwill recognition, or capital adjustment) determine whether the firm may deduct the payment or must capitalise it and adjust partners' capital accounts. Discussion-Forum Income Tax Fri, 28 Jan 2011 19:33:06 +0530 https://www.taxtmi.com/forum/issue?id=2702