Legal Definitions - partnership distribution

Definition:Partnershipdistribution refers to a payment made by a partnership to one of its partners. This payment can be in the form of cash or property and can be made out of the partnership's earnings or as an advance against future earnings. It can also be a payment of the partner's capital in partial or complete liquidation of their interest in the partnership.

Examples:

• John and Jane are partners in a small business. At the end of the year, the business made a profit of $50,000. The partnership agreement states that the profits will be split equally between the partners. Therefore, John and Jane each receive a partnership distribution of $25,000.
• ABC Partnership is dissolving, and its assets are being liquidated. The partnership has $100,000 in assets, and after paying off all debts and obligations, there is $50,000 left to distribute to the partners. The partnership agreement states that the profits will be split 60/40 between the two partners. Therefore, Partner A receives a distribution of $30,000, and Partner B receives a distribution of $20,000.

These examples illustrate how partnership distribution works. In the first example, the partnership made a profit, and the partners received a distribution based on their agreed-upon profit-sharing arrangement. In the second example, the partnership is dissolving, and the partners are receiving a distribution of the remaining assets based on their ownership percentage.