Business partners should know tax implications during a buyout, as the IRS might define it as a taxable event. Typically, buyouts for small businesses that average less than $500k in annual gross receipts are not taxable. Buyouts for businesses that average over $500k in annual gross receipts are typically taxable.nnPartnership buyouts are considered a Section 381 transaction, meaning they are so complex that businesses should consult an accountant or tax professional. The tax implications could include, but are not limited to:nnThe exiting partner must pay taxes on the buyout amount received.nThe business owner may have to pay taxes on income generated after the buyout.nThe business owner may assume tax liabilities the partner had before departing.