When a new partner buys an ownership interest in a partnership directly from an existing partner for more than the balance in that partner's capital account, under the more common method of accounting for those transactions,

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When a new partner buys an ownership interest in a partnership directly from an existing partner, it is a transaction between those parties, and in that way is comparable to the sale of stock. While the other partners may need to approve the transactions, they are not involved financially.

When a New Partner Buys an Ownership Interest in a Partnership