Outside Basis

[Mark Goldberg]

My client inherited a 50% partnership interest in 2004. The partnership held one piece of real estate which was sold in 2005. I have the K-1 showing the gain. I need to reduce the gain by my client's step up in basis and increase the gain by removing the old basis. However, do I need to figure depreciation on the outside basis (the step up) as well?

[veritas]

If your client inherited 50% last year the partnership was terminated.

[Mark Goldberg]

I'll rephrase

My client inherited 50% of the partnership upon the death of his father in 2004. The other 50% was inherited by my client's brother. The partnership terminated upon the sale of the real estate in 2005. Does the step up in basis each receives (outside basis) get depreciated?

[Unregistered]

1crewse

The real estate sale net gain has to be reported as determined by the 1065-K1. Then think of your partnership interest much the same as if you owned stock in a corporation, inthat as the partnership liquidates and/or distributes assets your outside (stepup) basis is your cost. Outside basis is not depreciated.

Can't remember my password and not on my computer. OldJack

[Unregistered]

Now I'm not a work either. But my point was if you have 50% or more change in ownership in a partnership the partnership terminates. I'm unaware but maybe change because of death has some exception. Hopefully someone else can chime in.

[cpadan]

Each brother inheritted 50% partnership interest from father? So father was 100% owner of partnership? Are you sure the partnership wasn't setup after father died?