A partnership is investing heavily in equipment eligible for 100% AIA. The equipment depreciates slowly and fairly evenly over 10years so 10% on cost is the rate of depreciation in the accounts. My concern is that there is therefore a large potential tax liability if the business were to close and realise the value of the equipment. The partners have been in the habit of drawing all available profit. I am thinking of suggesting that an amount equivalent to the potential liability is retained in capital accounts as a "tax reserve" but am likely to meet with protests. Of more concern is the fact that one partner may retire in a few years and could potentially escape picking up his share of the potential for future liability. Has anyone any experience or suggestions on how to handle this please? At the moment we are probably looking at about £50,000 of tax between 3 partners.