Selling real estate in partnership and dismantling LLC---questions on tax at LLC and partnership levels

[Golfer2016]

Two partners have a rental property in a LLC. They are going to sell that property and have a capital gain and subsequently dismantle the LLC. 

I know that the real estate sale will create capital gain income on the K1.  However, will dismantling the LLC and giving them the proceeds also create another layer of taxation? 

The proceeds are higher than the partner's capital account.  

As a example:

Basis is $100K

Sales price is $500K

Mortgage is $50K

Partnership total account is $90K (let's say they had some net losses that lowered this)

They distribute: $$450 total (gross price - mortgage)

I know the $400K will be a taxable capital gain ($200K to each partner), but do we also need to account for the partnership equity account?  If so, how would that be done in my example?  It just seems like it is being double taxed.  

Thanks!

[IRonMaN]

If it seems like it is being double taxed, you might want to do just a tad more reading on how partnerships work.

[abctax55]

No.

[Golfer2016]

So the partnership equity accounts are ignored for this purpose?

[IRonMaN]

The sale increases their basis.  

[abctax55]

No (to the question of whether equity accounts are ignored).

But you need to do some reading on how a partnership dissolution is handled, at both levels (partnership AND individual).