Legal Question in Business Law in Washington
buyout agreement
I am leaving a partnership and we are creating our buyout agreement. I was wondering if it is common or even legal for my partner to claim in writing that he assumes all responsibility for the sales for the year so that all the taxes for the year will be on him? The reasoning behind this is because i was not actively involved in the business very long and did very little sales and would cost me more money to do the taxes on it then I actually made.
1 Answer from Attorneys
Re: buyout agreement
To answer your direct question, "yes." It is legal for one party to an agreement to assume what might have otherwise been a joint responsibility- in this case, for potential taxes owed.
Usually, there is a trade off, and I think you allude to it, namely, that your partner is the one who earned most of the funds associated with those taxes.
Even if you write this agreement yourself, you really ought to have an attorney review it for you before signing off. Too many people enter these agreements and do not address certain things that may come up later, and then what was a $500 problem suddenly becomes a $10,000 problem.
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