Partnership

[S T]

Have a Partnership

Partner 1 has 80%
Partner 2 has 20%

Partner 2 passes away 12/22/2011, and 20% interest is left to 3 adult children - There is a clause in the Partnership Agreement for this.

I understand that income/ loss from 1/1/2011 thru 12/22/11 is allocated to Partner 2, and from 12/23/11 thru 12/31/11 is allocated to each of the 3 children.

Partner 2 basis and capital accounts = -0- as of 12/22/11 and children's accounts will then reflect the % of basis and capital accounts?

Is there any additional form on the partnership return that needs to be also completed? I only have to do book entries in the Accounting?

Thanks

Sandy

[veritas]

Look at making

a 754 election. This is for a transfer where basis could be different than partnership's basis.

[S T]

Thanks Veritas,

So it is stepped up basis?? and most of that would be "goodwill" if there is any in today's market?
No Real Estate Property involved
Mostly Cash, Inventory (Hot Assets)- so those would be the actual Cash Value, and then there is "Equipment" which has been depreciated since 2006.

Sandy

[Gretel]

Sandy, I can't answer your questions but would like you to be aware of two thing with this election.

1. The election is binding for the partnership for all future years and can only be revoked with IRS approval.

2. There will be additional bookkeeping costs for all these future years as well.