Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 170.0045


170.0045 Operations After Partnership Dissolution. Three individuals form a partnership to operate a service station. However, the seller's permit is issued only in the name of the managing partner. All of the other aspects of the operation also are solely in the name of the managing partner. The operations are not profitable, and the partners meet in March 1986 to discuss closing. The managing partner refuses to close the business, but does agree to buy out the others' interests. In May 1986, the managing partner repudiates the March agreement. In June 1986, the other partners file suit to rescind the operation. In December 1986, the Board learns of the existence of the partnership.

In general, a partner cannot bind co-partners to new obligations after dissolution except for any act appropriate to wind up operations. On May 2, 1986, after the repudiation of the March agreement by the managing partner, the other partners insisted that the managing partner live up to the March agreement. The Board concluded that at this point the partnership was dissolved. Further operations were not necessary to wind up the business. Thus, the other partners are not liable for tax for periods after May 3, 1986. 1/29/88.