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Generally there is no gain or loss in recognized by the partners in technical termination.
The partnership technically terminated back on October 31 of the previous year and the tax return filings were overdue.
First, by Joe trying to do his own tax work, he has caused himself to waste cash dollars through taxes and penalties not to mention stress.
What Joe needed to know is that as soon as he bought out his partner, the partnership died because it requires two partners.
What is the effect of this a “technical termination”?
Existing partnership is deemed to transfer all assets and liabilities to a new partnership in exchange for an interest in new partnership.