Partnership Property

[barzillai]

Client owns his own farm and has a partnership with his brother to run another farm. In 2007, the partnership bought a couple of tractors, which are used on the partnership's farm, and on the brothers' individual farms. The 1065 has already been prepared by someone else, without the tractors being included for depreciation. Instead, the brothers wish to each depreciate a 1/2 interest of each tractor on their individual Sched F. If the depreciation is taken on the 1065 or Sched F, the bottom line(taxes owed) will be the same. My question is: Is it permissible for partners to depreciate property owned by the partnership but used on their own farms on Shed F?

Thank You

[Bees Knees]

No, if the partnership purchased the tractor.

They could if they purchased the tractor outside of the partnership. Maybe you could count the purchase of the tractor as a distribution, one half to each partner, and then let them own it outside of the partnership. I guess it would depend on how the tractor is titled.

Or better yet, distribute the tractor to the individual partners. It is a tax free distribution. Then both partners could claim depreciation on their half of the tractor outside of the partnership.