Does anyone have access to information for partnership that is an LLC,which has a trust as a partner makes the 754 election and how to allocate the increase in assets already owned by the partnership.
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Sec 754
Believe partnership's inside basis is equal to contrbuting partners basis in the property plus any gain recognized. Any allocation of inside basis increase to existing assets would be made on relative FMV. This is best of my recolection without researching it. -
Llc Ptrship
Go to your search engine, Google, and type in Sect. 754, LLC to Ptrship. and then go search.Comment
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754-why New Partner???
Allocation is done by setting up assets for the step up only.. Deductions are assigned to those affected... Who is leaving-trust-death of a partner????Comment
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section 754
One partner died and his ptsp went into a trust,now trust is the other partner and I have to allocate step up in basis of assets from trust. There are 2 partners now,an individual and the trust.Comment
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Apprasal
All assets are valued at date of death. The difference is the step up-limmited by the % change in ownership-assigned to those assets on a pro rata-based on step portion. Get Bees to explain in english. Obviously no step up on cash same FMV and book, etc. separate assets are set up on the books with deductions going to the new ownership only on the step up. If the only asset was a building with book basis for the building $200,000 and date of death value for the entire building $500,000, and 40% ownership transfer then the step-up booked for 754 would be 40% x $300,000 = $120,000-it is assigned to the new partner and depreciation on it is assigned to the new partner.
Quick-but let Bees etc. take the longer approach.. If 754 not elected the new partner gets a step up in partnership basis not the assets-it partnership sells asset and does not liquidate the partnership new partner gets a huge gain on asset passed to him and waits to get a capital loss in a year the partnership is liquidated-nice way to pay taxes and then get $3000 limitation on the loss if timing is wrong. Hopefully cash flow will help. Once 754 in place the downside is revaluing when ever a partner leaves even reducing the basis if values have gone down.
I am quick, but not always easy to understand.Comment
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section 754
Jon: Thanks for your help,where do I buy Bees that you refer to?Comment
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