I had an LLC which was a partnership between my husband and myself. My husband died in 2018. The LLC is now solely in my name. How do I hand the questions of disposition?

[DanielV01]

It depends on the questions themselves.  What specifically are the questions asking?  And we are sorry for your loss.

[officemanager196]

I have an error showing up under K1P Part II disposition of partnership interest Item 1 how was partnership interest disposed of. One answer is transferred partnership interest because owner died. but it is still asking for sale price and basis of partnership interest. Not sure how to enter that nothing was sold.

[DanielV01 · Accepted solution]

It depends.  While it is true that you technically did not "buy" your husband's share of the partnership, from a taxable standpoint you did.  Your "purchase price" and his basis are going to be the same number.  You will need to figure out what his basis is.  As a general rule, his basis is the amount of personal investment he has put into the partnership, plus all of the earnings of the partnership, plus any additional capital he may have contributed to the partnership, minus all distributions and non-deductible expenses passed through to him throughout the years.  Hopefully, this information has been getting tracked regularly, and "all" you need to determine is the amount of gain that is attributable to him up until his passing.  On his death, you "purchased" his share of the partnership for the exact amount of basis he had in the partnership, and absorbed his share of the partnership.

If you are not going to have another individual involved in the LLC, make sure you select that this is the Partnership's final return, and be sure you distribute out all of the Partnership's assets to yourself (even if the business continues on).  Without two people in the LLC, you will have to change the structure to either a Sole Proprietorship (Schedule C), or choose a structure such as an S Corporation.  But you will no longer be a Partnership, because there must be at least two individuals (or an individual and an entity) to have a Partnership.