General Partnership in CA

[gamacpa]

Final 1065 will be 2024.  In 2023, my client, a 1/3 partner died.   I do prepare the 1065?   How do I allocated stepped up basis for only asset, a building, that was sold 2024?  So that surviving living trust will benefit of stepped up basis in reporting the sale in 2024, final t/r. ?

Thank you in advance .

Glenn

[qbteachmt]

Who has been preparing the 1065? Or did you mean, short year, even though there still are 2 partners? Or, it's being disbanded right now and they want to file right now, for some reason.

"So that surviving living trust will benefit of stepped up basis in reporting the sale in 2024"

The trust didn't own the building, though, right? The partnership will pass through that info to the trust. The partnership is holding the property and taking the actions. How does a building owned by a partnership, and also there being a surviving trust, benefit from this person's death? Whose trust is this? What sort of trust? Is the trust the partner already, or became the partner as beneficiary of the partnership interest?

So many questions...

[gamacpa]

qbteachmt,  I have been preparing the 1065. My client, a 1/3 partner died late 2023. He left a living trust. So in 2023 there were 3 partners.  The 2 of the 3 original and the living trust. The only asset is the building that will be sold in June 2024 for which the final K1 will be filed.  The living trust did NOT own the building.  The original 3 partners including my deceased client purchased the building many years ago. .  I am not sure the living trust will benefit from a "step up" basis.  I know that the beneficiaries believe that they and the trust will according the title company handling the closing.  I think I should refer the matter to a "tax attorney"?   Does this help?   

[sjrcpa]

Assuming:

a) While deceased person was alive, their share of partnership income was reported on their 1040 (as in trust was disregarded for tax purposes)

b) Upon their death, the trust became irrevocable.

c) The partnership interest was included in their estate.

Then, the partnership can make a 754 election to step up the basis of the trust's share of the assets to dod FMV.

[gamacpa]

thank you