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Discussion:Rental prop contributed/Partnership

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Discussion Forum Index --> Tax Questions --> Rental prop contributed/Partnership


Mtmckeecpa (talk|edits) said:

8 October 2006
Husband and wife want to contribute rental property to partnerhsip LLC, both will own 50/50.

Adjusted tax basis of rental property is $50,000, debt on property is $60,000.

1) Is there a $10k gain on this transfer?

2) Is the gain a capital gain?

3) Is a 754 election possible here or even make sense?

Pretty basic questions...I have very few partnership returns...Thanks!

Riley2 (talk|edits) said:

10 October 2006
No gain or loss here. See Sec. 721. The assumption by the LLC of the $60,000 in debt will be treated as a $60,000 cash distribution. However, the $60,000 increase in the members' share of LLC debt will be treated as a $60,000 cash contribution. See Sec. 752.

There would be a gain if the LLC had made a corporation election.

A 754 election would not be allowed, nor would it be beneficial.

Mtmckeecpa (talk|edits) said:

10 October 2006
Riley,

Thanks! I appreciate it!

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