Partnership to Sole Proprietorship
Partnership with 2 equal partners dissolves the partnership on 12/31/16. The assets of the partnership were transferred to partner #1 so he could operate same business as a sole proprietor (total assets were less than $100). In the agreement to dissolve, both partners waived any right to payment of goodwill of the partnership to either of said partner. However, in the agreement to dissolve, both partners agreed and stipulated that partner #2 contributed $6,000 capital to the Partnership and that Partner #1 would pay Partner #2 an amount of $500 per month for each month of 2017. My question is: Can the sole proprietor (partner #1) claim that $6,000 as an expense of the business he's now operating? And, if so --- Does he have to provide a 1099 to Partner #2 who received the money?