Prop and cash dist.

[Unregistered]

Partnership closed in 2005.

2004:
Partner's took cash last year (2004) when they sold 6 properties. At that time Partner "A" did not get anything (no cash, no property). Rest of the partners got cash distribution.
There were two properties left in partnership #7 & #8.

2005:
Partnership sold last rental property (#7) in 2005. No cash received as there was loan and expenses.
Partnership gave partner "A" property (#8) instead of cash at dep. value. Thus there is no gain or loss. Partner "A" will start dep. at the book value of asset.

(1) Do I need to elect Reg 1.754-1(b) (1) so that partners can adjust propertie's book value

(2) How do I report distribution

(3) What happens to capital account?

Thanks

[Unregistered]

I do not think you need Sec 754.

Let's see what other member say.

[Unregistered]

Can partner give properties to other at book value? I doubt it.

[Bees Knees]

I don't see how a Section 754 election can apply since the partnership is liquidated.

TTB, page 20-9, "A partner will recognize gain on a liquidating distribution to the extent that money distributed exceeds the partner's adjusted basis in his or her partnership interest."

So since no money was distributed, no gain is recognized. The partner's basis in the property received from the partnership equals his or her basis in the partnership just before the liquidating distribution. It is basically a no gain or loss transaction, so you could just report the liquidating distribution as a wash on Schedule D.

[Unregistered]

I don't see how a Section 754 election can apply since the partnership is liquidated.

TTB, page 20-9, "A partner will recognize gain on a liquidating distribution to the extent that money distributed exceeds the partner's adjusted basis in his or her partnership interest."

So since no money was distributed, no gain is recognized. The partner's basis in the property received from the partnership equals his or her basis in the partnership just before the liquidating distribution. It is basically a no gain or loss transaction, so you could just report the liquidating distribution as a wash on Schedule D.

Thanks. Since partner "A" Received properties (Gas station with land, Bldg, Asstes etc.), he will continue to depreciate at the book value of received properties. This partner has formed a corp and there for from now on (01/01/2005) corp will take depreciation. Does this sound right?

[Bees Knees]

Yes, if the contribution of property to the corporation qualified for a Section 351 exchange, meaning the people contributing property to the corporation owned at least 80% of the stock after the transfer. If this is a single shareholder corporation, then he or she owns 100% of the stock after the transfer, and the corporation would simply pick up the depreciation where the partnership left off.