I'm sorry.  This was not actually a gift. The son assumed responsability for half of the debt. The whole debt was 720000. The son committed to pay half of the debt for partnership interest in the partnership. The Fathers percent dropped to 5% with the son owning 95%. I know nothing changes for the partnership. But is this going to constitute a taxable transaction for the individual partner dropping his partnership interest. No money or property changed hands. When the Father inherited the partnership the FMV of that part of the estate  was over a million dollars.  Your help is very much appreciated.