Re: Treatment of debit balance in partners capital account.
Partner had debit balance in partners capital account. He left the firm without paying overdrawn amount to the firm. Can partnership firm claim this as business loss or unrecoverable loan and write off the said amount in profit & loss account.
: At the time of retirement, a deed of retirement would have been executed, according to which the partner’s capital account would have been fully and finally settled. Therefore, loss on settlement, if any, would be a capital loss.
if a retiring partner retires with the debit capital in his name, the firm can claim capital loss. a the same time , whether the retiring partner will have to pay long-term capital gains tax/ short-term capital gains tax? if so, how can it be saved?
what are the tax implications on a retiring partner and the partnership firm when a partner retires from a firm having fixed assets (without revaluation of the fixed assets i.e. land or immovable property or without fair market value of the fixed assets)?