Q: Can my business partner change ownership percentage without my knowledge?
I have K1s stating my percentage ownership. Is K1s good enough to establish percentage of ownership?
A: Good question. Usually, a business partner can't change your ownership percentage in a partnership or company without your permission or unless you have given the partner some sort of right to do so. There are tax implications associated with that change (especially if you are in a partnership or LLC that is treated as a partnership for federal tax purposes), so any change in ownership will have more implications than just your share of profits in the business.
I suggest reviewing your partnership agreement or LLC operating or company agreement to see whether your partner has the right to make this change without your permission. If there is no such agreement, then I would look to the state law under which your partnership or LLC was formed. I would be surprised if any state law allows for this unilateral change though.
Of course, please consult with a licensed attorney for final determination of your rights.
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