Legal Forms
To search for a particular term please use the following search box.
Important Notice : Lawyerintl.com strongly recommends that you seek independent legal advice from a qualified lawyer before using any of the forms on this site, in order that you can verify the forms are suitable for your needs.
Continuation Of Income Payments
CONTINUATION OF INCOME PAYMENTS PARTNER'S RETIREMENT OR DEATH
AGREEMENT made, [Date of agreement], among the following persons:
[Name of first partner] [Name of second partner]
1. Name and business.
The parties hereby form a partnership to engage in the practice of public accountancy under the names of [Name of first partner] and [Name of second partner] the principal office to be in [Address of Principal Office]
2. Term.
The partnership shall begin on [Beginning date of partnership] and continue until terminated as herein provided.
3. Capital.
Whenever required in the business of the partnership, capital shall be contributed by the partners in the proportions in which they share in partnership profits and losses. This paragraph shall not apply to the estate of a deceased partner. Each partners capital account shall be determined and maintained throughout the term of the partnership in accordance with the requirements of Section 704(b) of the Internal Revenue Code of 1986, or its counterpart in any subsequently enacted Internal Revenue Code "the Code", and any of the Treasury Regulations "the Regulations" promulgated from time to time thereunder.
4. Profit and loss.
The net profits and losses of the partnership shall be divided and borne in the following proportions, except that all losses resulting from the wrongful act or gross negligence of any partner shall be charged to him in full:
The senior partners shall have the right to adjust the bases of participation by junior partners in profits and losses without the consent of the junior partners. The senior and junior partners are designated in paragraph 7.
5. Salaries and drawings.
Any partner, except the estate of a deceased partner, shall have the right to draw against anticipated earnings, in monthly installments, an amount not in excess of percent of his earnings for the preceding year, but in no event shall a partners withdrawals exceed his proportionate share of partnership profits. Any amounts so withdrawn shall be charged against that partners distributive share of the profits of the partnership business. Any partner shall have the right, at the end of any calendar year, to withdraw the balance of his share of the partnership profits for that year. The drawings of partners during the first year of the partnership shall be agreed upon among all the partners.
6. Interest.
No interest shall be paid to partners on any contributions to capital.
7. Management, duties, and restrictions.
The partnership shall be composed of the following persons:
1. [Name and Address of 1st partner]
2. [Name and Address of 2nd partner]
3. [Name and Address of 3rd partner]
4. [Name and Address of 4th partner]
The senior partners shall have the right to admit additional partners upon such terms as they may determine, but the participation percentage in net earnings of the estate of a deceased partner shall not be altered nor the period of participation curtailed. All of the partners shall participate in the conduct of partnership affairs and each partner shall devote his entire time thereto. In matters relating to the routine management of the partnership business, a decision by the majority of the senior partners shall be binding upon the partnership, but on questions of firm policy the decision of a majority of the senior partners shall prevail. The estate of a deceased partner shall continue as a member of the partnership as hereinafter provided, but such estate shall have no voice in the management of the partnership business.
8. Banking.
All funds of the partnership are to be deposited in its name in such checking account or accounts as shall be designated by the partners. All withdrawals therefrom are to be made upon checks signed by any senior partner.
9. Books.
The partnership books shall be maintained at the principal office of the partnership, and any partner shall at all times have access thereto. The books shall be kept on a cash basis, and shall be closed, balanced, and audited at the end of each calendar year.
10. Withdrawal or liquidation.
Upon withdrawal of any partner or upon the voluntary liquidation of the partnership, the following procedure will be observed:
a. Withdrawal. Any partner shall have the right to withdraw from the partnership at the end of any calendar year. Written notice of intention to withdraw shall be served upon the other partners at the office of the partnership at least three months before the end of the calendar year. The withdrawal of any partner shall have no effect upon the continuance of the partnership business. The partnership books shall be closed at the end of the calendar year in the regular way and the withdrawing partner shall be paid the following amounts: i. the undrawn portion of the withdrawing partners share of the partnerships profits, if any, as of the end of the year, ii. the amount of his capital account as of the end of the year, iii. the withdrawing partners proportionate share of any fees received by the continuing partnership subsequent to the end of the year for accounts receivable or work in process as of the end of the year. In determining the part of the total fee in which the withdrawing partner shall share, account shall be taken of the relative importance and value of the work done prior to the end of the year compared with the work done subsequent thereto. The remaining partners shall have the right to deduct from the amount payable to the withdrawing partner his proportionate share of any debts andor reasonable reserve for liabilities not reflected on the books of the partnership as of the end of the year. The remaining partners, together with any new partners, shall have the right to continue the business under the same firm name.
b. Liquidation. Should the partners having percent or more of the interests in the profits and losses of the partnership agree to terminate the partnership business, the partners shall share in any profits and losses of the business during the period of liquidation in the same proportions in which they shared the profits and losses prior to the termination of the partnership business.
The proceeds of such liquidation shall be applied in the following order of priority: i. to the payment of any debts and liabilities of the partnership ii. to the setting up of any reserve which the partners shall reasonably deem necessary to provide for any contingent or unforeseen liabilities or obligations of the partnership. At the expiration of such period of time as the partners shall deem advisable, the balance of such reserve remaining after the payment of such contingency shall be distributed in the manner hereinafter set forth iii. thereafter, the balance of the proceeds, if any, shall be distributed in accordance with the positive capital account balances of the partners, as determined after taking into account all capital account adjustments for the partnership taxable year during which such liquidation occurs, and shall be made by the end of such taxable year or, if later, within ninety (90) days after the date of such liquidation. For purposes of this subparagraph, a liquidation of the partnership shall mean a liquidation as set forth in Section 1.704-1.b.2.ii.g of the Regulations.
If, following the liquidation of a partners interest in the partnership within the meaning of Treasury Regulations Section 1.704-1.b.2.ii.g a partner has a deficit balance in his capital account as determined after taking into account all adjustments to said capital account, including the adjustments for the year during which such liquidation occurs, such partner shall be unconditionally obligated to pay the amount of such deficit balance to the partnership by the end of such taxable year or, if later, within ninety (90) days after the date of such liquidation, which amount shall be applied and distributed in accordance with the provisions of this paragraph. If the surviving partners terminate the partnership before the expiration of the five-year period following the end of the month in which a partner dies or retires, the amounts owing to such partner from the partnership, as hereinafter provided in paragraph 11, shall be paid in full out of the liquidation proceeds of the partnership before any sums shall be paid to the surviving partners. For this purpose, the earnings attributable to the estate of such partner for the balance of the five-year period shall be computed on the basis of the average annual net earnings of the partnership for the two preceding calendar years.
11. Death.
Upon the death of any partner, the partnership business shall not terminate, but shall be continued as a partnership among the surviving partners and the estate of a deceased partner. The division of income and the payment of the deceased partners interest in capital, accounts receivable and work in process shall be as follows:
a. Income. The estate of a deceased partner shall participate in the net earnings and net losses of the partnership for a period of year(s), from the first day of the month following the month of death of the partner, in the following proportions:
The share of profits to which the estate of a deceased partner is entitled each calendar year shall be paid to the estate in four quarterly installments, each of which shall be equal to one fourth of that years participation level. The estates participation level for a given year shall be equal to percent of the deceased partners or of the estates participation in the partnerships net profits during the preceding year. Any necessary adjustments shall be made upon the closing of the books for each calendar year, and the final adjustment shall be made at the end of the year participation period. Payments to the estate under this paragraph shall be based on calendar year quarterly periods, the first payment to cover the calendar year quarter ending next after the death of the partner, and the final payments to be made at the end of the year period. To absorb the difference between the deceased partners proportionate interest in the profits of the partnership and the participation percentage of his estate, the interests of the surviving partners in the partnership shall be increased in the proportions of their respective interests as stated in paragraph 4.
b. Capital. The interest of a deceased partner in the capital of the partnership shall be determined as of the end of the month in which his death occurs, and shall be paid to his estate in equal quarterly installments, together with interest at the rate of percent per annum, over a period of years, the first payment to be made at the end of the calendar year quarter in which the death occurs. The deceased partners capital interest shall equal his capital account as shown on the partnership books at the beginning of the calendar year in which his death occurred, increased by his share of partnership profits or decreased by his share of partnership losses for the period from the beginning of the calendar year in which his death occurred until the end of the month in which his death occurred, reduced by his drawings during such period.
c. Accounts receivable and work in process. The partnership shall determine the amount of accounts receivable billed but not yet paid at the end of the month in which his death occurred. The interest of a deceased partner in the accounts receivable shall be the same percentage as his percentage of the income in paragraph 11.a. This amount shall be paid to his estate in equal quarterly installments, together with interest at the rate of percent per annum, over a period of year(s), the first payment to be made at the end of the calendar quarter in which the death occurs. The interest of a deceased partner in the work in process shall be paid to his estate in equal quarterly installments, together with interest at the rate of percent per annum, over a period of years, the first payment to be made at the end of the calendar quarter in which the death occurs. The interest of a deceased partner in the work in process at the time of death shall be determined by the surviving partners as of the end of the month in which his death occurs. The amount so payable with respect to the work in process shall be capitalized on the partnership books. When the partnership shall receive payment on account of such work in process, the share attributable to the decedent shall be credited to that account, and shall be deducted in computing the amount otherwise payable to the estate under subdivision (a) of this paragraph.
12. Retirement.
A partner may retire from the partnership at the end of the calendar year upon days prior notice to the partnership. Upon the retirement of any such partner, the partnership business shall not terminate but shall be continued as a partnership among the surviving partners and the retired partner. The division of income and the payment for the retiring partners interest in capital, accounts receivable, and work in process shall be determined in the same manner as upon a partners death the provisions which are contained in paragraph 11, treating for this purpose the date of retirement as the date of death.
13. Use of name of deceased partner.
The surviving partners shall have the right to continue to use the name of any deceased partner in the partnership name.
14. Expulsion.
Should the partners owning [Percent of ownership] percent or more of the interests in the profits and losses of the partnership determine that a partner should be expelled from the partnership, such partner must withdraw from the partnership. Such partner shall withdraw from the partnership on the last day of the month during which the partnership notifies such partner in writing of his expulsion. The partnership shall make such payments as may be due the expelled partner on the same basis as if the expelled partner had withdrawn from the partnership.
In witness whereof the parties have signed this Agreement.
Signature Date
Signature Date
Signature Date
Signature Date