Question

Step up in basis for a 2 member partnership upon death of a partner

Forum|Forum|5 years ago
February 17, 2021
1 reply
0 views

My husband and I were members of a 2 member LLC holding a rental property. My husband owned 99% I owned 1%. He passed away April 8, 2020. I need to do a 754 election and step up only his 99% to FMV and allocate that portion of the depreciation to his estate. How do I step up the assets and have the appropriate depreciation go to him?

G

gloriah5200

if a partnership return is required then

from the IRS regs which govern the election

Time and method of making election.

(1) An election under section 754 and this section to adjust the basis of partnership property under sections 734(b) and 743(b), with respect to a distribution of property to a partner or a transfer of an interest in a partnership, shall be made in a written statement filed with the partnership return for the taxable year during which the distribution or transfer occurs. For the election to be valid, the return must be filed not later than the time prescribed by paragraph (e) of § 1.6031-1 (including extensions thereof) for filing the return for such taxable year (or before August 23, 1956, whichever is later).

Notwithstanding the preceding two sentences, if a valid election has been made under section 754 and this section for a preceding taxable year and not revoked pursuant to paragraph (c) of this section, a new election is not required to be made.

The statement required by this subparagraph shall (i) set forth the name and address of the partnership making the election, (ii) be signed by any one of the partners, and (iii) contain a declaration that the partnership elects under section 754 to apply the provisions of section 734(b) and section 743(b). For rules regarding extensions of time for filing elections, see § 1.9100-1.

For additional information please refer to:

Making section 754 election when partner deceased