Client was a GP in a partnership where her partner insists on preparing the 1065. No, I don't like this. Mid year, the entity changed to an LLC taxed as a partnership. The partner/member prepared two returns, one as a GP ending on 6/30/11, and one for the LLC from 7/1/11-12/31/11. Assets the GP held were treated as disposed of on the GP return, and then reported as contributed on the LLC return at the new basis. There is a new EIN, so the two returns (I guess) are necessary, but my first thought is the assets were distributed to the partners and then recontributed to the LLC, so there should not be any gain or loss. My P'ship tax is rusty though, and of course, my client needs the return for a refi.
And then there is the issue of partner basis: I'm sure my client has sufficient basis to continue to take the losses, since she is the 'money partner', but I have no idea of any tracking of basis and, of course, the capital account sections of the K-1 is blank, and no basis worksheet have been included.
So my question is just, does this seem even slightly correct?
And then there is the issue of partner basis: I'm sure my client has sufficient basis to continue to take the losses, since she is the 'money partner', but I have no idea of any tracking of basis and, of course, the capital account sections of the K-1 is blank, and no basis worksheet have been included.
So my question is just, does this seem even slightly correct?
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