Isn't the existing owner simply contributing a property he/she already owns into a partnership?  You may have an IRC Section 704(c) issue and have to pay a 'stamp tax' but I'm not sure you have a taxable event under IRC Section 721.  Further, not sure IRC Section 1031 applies at all.  How much ownership is the existing owner supposed to receive?  Is the existing owner going to receive a distribution from the partnership (i.e., a disguised sale transaction)?

"Long Live IronMan"