Lomita, CA asked in Business Law for California

Q: CCC 15673(b) says an assignee is not obligated for liabilities unknown to the assignee at the time he became a partner.

What if an assignee never became a partner, just inherited an interest in a highly leveraged LP, the bank goes bankrupt, and assignee gets slammed with huge capital gains tax but without the actual gains (Phantom gains). Can he argue that the partner who owns the share underlying his interest must pay the cap gains tax? The interest holder did not know about the prior decades of tax-deferred distributions from second mortgages. The statute says that even if he were a LP, he would not be responsible for the tax debt he was not aware or informed of, so my feeling is that the interest holder should be even more protected from a Kryptonite K-1.

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1 Lawyer Answer
  • Los Angeles, CA
  • Licensed in California

A: Your facts are vague and contradictory. You say you inherited the interest, and also you say you have a partner who assigned the interest to you. Which is it? More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and Education Law. This answer does not constitute legal advice; make any predictions, guarantees, or warranties; or create any Attorney-Client relationship.

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