Listen and Hear are thinking of dissolving their partnership. Listen has a friend who told him to complete a "lump-sum" liquidation. Hear wants to complete an "installment" liquidation. They have come to you for advice. What do you recommend and Why?
What will be an ideal response?
"Lump-sum" liquidation and "Installment" liquidation does not represent a choice in procedures. They represent different points in time. A "Lump-Sum" liquidation takes place when all of the affairs of the partnership can be ended at the same time and all of the resulting cash can be distributed to the partners at that time. "Installment" liquidation is what normally occurs because the partners want access to some cash as soon as possible, and all of the partnership assets have to be sold and liabilities paid. The preparation of a "Safe-Payments Schedule" can allow this to happen in an orderly manner.
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