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A limited liability partnership was owned by a trust cfeated…

A limited liability partnership...

A limited liability partnership was owned by a trust cfeated by the former owner. At the former owners death, the trust required termination of the trust distribution of the partnership interest equally to the four children. The rented real estate properties are now being sold. Is there a step up in basis from the partnership's original depreciated real estate?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

I intended to say "created" by the former owner.

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Answered in 45 minutes by:
7/13/2017
Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 287
Experience: Director
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Yes, the Trust had a step up in basis for its assets, just as any individual person would. Thus, the outside basis of the trusts interest in the property stepped up even though the inside basis does not step up until the sale and distribution.

Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 287
Experience: Director
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Customer reply replied 7 months ago
Thanks. The trust that owned the property terminated at the beneficiary (owners) death and the partnership interest were distributed to the children. It seems to me that they get the step up in basis to the value of the partnership shares at the date of they got the property. However, the "inside basis", the way the partnership computes its tax gains (cost less depreciation) does not change. If next year property is sold by the partnership with a gain, the owners can offset current year losses the could not use because of their lack of basis. Do you agree?
PDtax
PDtax, Owner
Category: Tax
Satisfied Customers: 1
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Phone call session started

Sorry, I didn't see the phone call request. The partnership does not pay tax, it is the outside basis that is the most important part of this matter.

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Also, not knowing how everything was owned makes this difficult for me to answer. Were there other partners? Did the partnership terminate at death? How is 754 going to be applied? If no 754 election has been made, no adjustments can be made to the inside bases of partnership assets unless mandatory adjustments are required. I.R.C. §§ 743(a) & 734(b).

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Customer reply replied 7 months ago
I requested a phone call and was charged the fee. Please call me when you can at.(###) ###-####

It should not be charged unless complete. I would violate the terms of service by making call unless the offer and site has the phone call listed and I can complete the call detail report; otherwise it is not logged nor are you charged. I can inform customer service of the issue.

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Also, if this helps.. Section 743(b) adjustments must be made to the basis of partnership assets if immediately after the transfer of a partnership interest (death), the adjusted tax basis of all of the partnership assets exceeds the fair market value of the partnership assets by more than $250,000 (“substantial built-in loss”). I.R.C. § 743(d)

...

Give me a minute to figure out this site.. It does state the status was agreed... Let me call you in a minute.

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Customer reply replied 7 months ago
Please do. They confirmed that I had accepted their offer for a phone call.
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Matthew Breecher
Matthew Breecher
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