Drop and swap entered into in November 2020 but sale did not take place until 2021.

Forum|Forum|5 years ago
April 26, 2021
3 replies
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LLC (two members 50%-50%) has a drop and swap entered into in November 2020 but sale did not take place until 2021. I have distributed the property out on the K-1 for 2020. Checked box 12 YES on 1040 Schedule B - tenancy-in-common agreement in place for distribution. K-1s for the partners had a minor adjustment to balance the capital accounts. Should the K-1 for member receiving the property distribution be marked final? Is there any additional disclosure?

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BobKamman

Level 15

The drop and swap approach describes an exchange where a partnership interest is converted to TIC before the exchange takes place. But it sounds like just one partner got 100% of the property. And I don't see a Box 12 on Form 1040 Schedule B.