Proration or Partnership Income and Losses
example: Partner A (20% partner) sells to Partner B on Mar. 31. Proration?
Where a partner sells his or her interest to a new partner in the middle of the tax year, the selling partner's share of partnership income or losses must be allocated pro-rata (based on the date of sale) between the selling partner and purchasing partner.
Example: Sale date 1/4 of the year. Partner A will report 5% (20% * 0.25) of partnership's annual income or losses. Partner B reports 15% of partnership's annual income or losses.