Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Inputting 754 step up basis in partnership asset

mh85251
Level 2

Client is a 2 person partnership with a rental property as the only asset.  One partner died in January of 2020.  The partnership sold the rental property in March of 2020.  The problem is, the living partner has a gain, while the dead partner's estate has a loss due to the step up.  I'm trying to figure out how to enter the step up in basis into ProSeries as a fixed asset.  I have 2 thoughts on how to enter it, but neither one looks correct.

1. If I enter a new asset for the step up amount, and don't allocate any of the sales price, that asset shows a Section 1231 loss.  The original asset, on the other hand shows a Section 1231 gain, and shows Unrecaptured 1250 gain for the depreciation previously taken.  If I do it this way, the dead partner's estate would have a 1231 loss due to the step up, but will have 1250 gain for half of the previously taken depreciation.  I don't think that is correct.  

2.  If I increase the basis in the original asset by the amount of the step up, then the entire sale is a loss, and no 1250 gain is calculated.  If I do it this way, the living partner's half is being reported as all 1231 gain, with no 1250 gain.  This doesn't seem correct either.

Is there anyway to enter this and have the program calculate the correct answer?

 

 

 

 

 

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here