How do I convert a partnership to a sole proprietorship?

Question

My wife and I have a partnership for a small business (cash flow < $50k/year in either direction), registered in Oregon, USA. She died recently; I am her sole heir. Her will and the partnership agreement both pass the assets to me. With only one surviving partner, this can no longer be a partnership. How can I smoothly convert this to a sole proprietorship?

I contacted the Oregon Business Registry, but they claim this is a legal question, not administrative. All they could do is to point me to their FAQ and help pages, which do not cover the situation. From this, the best that I can find is to terminate the partnership and register independently as a sole proprietorship. I welcome any other suggestions.

Answer 1

File as a partnership for the return for the calendar year of her death. File on Schedule C as a sole proprietorship in subsequent years. Generally there is nothing to formally terminate.

Unless there are licenses to do business involved, no formal notification of change of entity type is necessary.

Since a partnership is a pass-through business, the tax characteristics from year to year carry automatically through your individual returns (just one return with no ambiguities if you filed jointly as widows and widowers are allowed to file a final joint return after the death of their spouse).