Partnership is LLP with Man and several children consisting the partners. Partnership owned 2 buildings at start of 2008.
The Man (father) told me during 2008 the partnership sold one of the two buildings (had been a single family home being rented) to Son #1. Sale was for $160,000; land = $35,000; house was originally $120,000 with $10,000 depreciation = $110,000 adjusted basis. So, total adjusted basis of house and land is $145,000.
My understanding is that Son #1 will be renting out this house.
Is this treated as:
A) a sale (partnership to recognize $15,000 of profit)
B) a partner contribution of $160,000 of cash and a tax-free distribution of the house and land
Any other help would be appreciated. I've worked with a couple partnerships but have not dealt with a transaction like this yet.
Bill
The Man (father) told me during 2008 the partnership sold one of the two buildings (had been a single family home being rented) to Son #1. Sale was for $160,000; land = $35,000; house was originally $120,000 with $10,000 depreciation = $110,000 adjusted basis. So, total adjusted basis of house and land is $145,000.
My understanding is that Son #1 will be renting out this house.
Is this treated as:
A) a sale (partnership to recognize $15,000 of profit)
B) a partner contribution of $160,000 of cash and a tax-free distribution of the house and land
Any other help would be appreciated. I've worked with a couple partnerships but have not dealt with a transaction like this yet.
Bill