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

jemciv
Level 1

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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3 Replies 3
BobKamman
Level 14

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.  

sjrcpa
Level 15

Partner receiving property will have a final K-1 if he is no longer part of the partnership.

And if this is the case, there is no longer a partnership either.


ex-AllStar
abctax55
Level 15

And there's a good chance that final partnership return may be late.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

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