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