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kforsette
Returning Member

Accumulated Depreciation for existing Parter when filing 754 step up in basis

I have an LLC with 50/50 partners.  One of the partners sold his 50% interest.  I am doing a 754 step up in basis.  I know that the original partner can only take depreciation on 50% of the original cost of the building.  The original building has a cost net of land of $170,000 and accumulated depreciation of $20,807.  When I calculate his depreciation for this year his cost would be $85,000 but do I allocate accumulated depreciation of $10,403.50 or the full $20,807?  I read someplace that all prior depreciation stands as it was, which to me means you list it all, but that does not make sense to me.

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4 Replies
MaryK4
Employee Tax Expert

Accumulated Depreciation for existing Parter when filing 754 step up in basis

If you have a 2 partner partnership and one partner leaves, by action of law the partnership no longer exists and becomes a SMLLC or you have to elect to treat it as a corporation.  Since 754 applies to the inside partnership basis, you cannot use it if the partnership dissolves.  

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kforsette
Returning Member

Accumulated Depreciation for existing Parter when filing 754 step up in basis

When the membership was sold only 5% was sold initially and then the other 25% was sold so there would have been 3 members at one point?

kforsette
Returning Member

Accumulated Depreciation for existing Parter when filing 754 step up in basis

We never dissolved the partnership.

MaryK4
Employee Tax Expert

Accumulated Depreciation for existing Parter when filing 754 step up in basis

The partnerships dissolves by action of law.  You cannot have a partnership with one person. @kforsette

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