What should my tax basis be for the 2018 tax year for an asset that was moved from a previously partially held LLC company that was closed down in the 2017 tax year; then was subsequently transferred to a Newly created LLC company I fully own(100%) in the 2018 tax year? Should that basis be Fair Market Value at the time of transfer of the asset to the new LLC or should it be some other tax basis?

[ZTaxPro]

When you distributed the asset from the LLC, if it was taxed as a partnership then you would get a carryover basis (same cost basis and depreciation), if it was taxed as a corporation they would distribute it at FMV which would become your basis. You contributing the asset to the new LLC would not change the basis since you fully owned the entity.

For you information LLC is not a tax entity. It can be taxed differently by the IRS so it is better to say partnership, s-corporation, corporation or disregarded entity.

[Rick19744]

I disagree with @ZTaxPro .  When you receive property in a liquidating distribution your basis becomes what is called a "substituted basis" if the LLC was taxed as a partnership.

This can be somewhat tricky, so depending on what was distributed, you may want to consult with a tax professional.

In a liquidating distribution you need to look at what was received in the distribution and compare that to your outside basis.  There are ordering rules as to the order of how assets are handled.

In a simple example, let's say the LLC, in a liquidating distribution, distributed to you two items; cash and one asset.  Cash was $2,000 and the asset.  Your outside basis is $2,500.

In this example, the cash is looked at first and compared to your basis and then subtracted.  At this point you have outside basis of $500.  The asset that was distributed to you will now take a basis of $500.  It does not matter what the partnership basis in this asset was.

It gets more complicated the more assets that are distributed to you.  Here you would look at the partnership basis initially, however, if there is outside basis remaining (or not sufficient basis) after the initial allocation, then there is another step that needs to be performed to adjust the basis in the assets. 

Is it possible that the partnership basis in the asset(s) will equal your basis.....possible, but not likely in a liquidating distribution.

[Carl]

It depends on how the asset was disposed of when the partnership was reported as closed, sold or otherwise disposed of. The disposition of those assets by the partnership would be indicated on the final K-1 that each owner received upon closure/sale/disposition of that partnership.

So how was it disposed of by the partnership? Did the other owner's just "give" all their share of the assets to you? Did you pay money or otherwise compensate the other parter(s) for their share of the asset?

Like I said, how it was disposed of by the partnership determines the value of the asset that will be used for depreciation in the newly formed single member LLC. - Especially if *YOU* were also a partner in the multi-member LLC/Partnership.