Post Office Bldg

[Corduroy Frog]

Taxpayer and Two Brothers purchased a building in a small town in 1955, refurbished it, and began renting to the U S Post Office. The three brothers formed a partnership. The Post Office has paid rent every year since, and over the years the partnership has continued to file a return.

Only the taxpayer is still alive, but in a nursing home. The other brothers have passed, but the ownership has been given to spouses and children, so the partnership still continues on. I began filing for the partnership in 2008. No "balance sheet" information has been filed on prior returns.

I would like to populate the balance sheet with values. According to GAAP, historical cost must be used, i.e. less than $5,000 for the building when it was purchased. Even if we use GAAP, there are problems arising.

The shares of the original partners are passing to their children, one-at-a time. Even though the building on the balance sheet may be $5,000, the stepped-up basis of the partnership share must be valued at FMV.

The cost of paying an appraiser every time a death occurs should not be necessary. In a few years, there may be as many as 9-10 partners, each of whom would have inherited a share of a revalued partnership upon death of their parent. GAAP does not serve us well in this situation.

Any suggestions?

[ChEAr$]

Determination of stepped up basis may be necessary for heirs, but does that figure somehow come into play on the 1065 itself?

Seems each new heir would have his own tax problem to be solved by his own tax man.

However, if I have two appraisals on a building, say four years apart, I can backtrack and determine the geometric increase in inflation, either by a mathematical formula or by brute force using my handydandy calculator here.