State law might apply so ask locally.  I would deed it from "A&B Partnership" to "A, a 50% interest" and "B, a 50% interest."  Is the partnership engaged in any business or own other real estate as rentals?  I would not guarantee to the clients that IRS would agree with use of the Section 121 exclusion, and advise them that IRS once said it was OK but then changed its mind in one particular situation.