Listing the property distributions on the Form 1065 as well as the sales that report on Form 4797 denotes to the IRS that the partnership distributed the properties to the partners and the values assigned. If the FMV sales price does not result in a gain against the depreciated values of the properties, then the $0 gain on the partnership return is correct. No other document needs submitted with the Form 1065 as an explanation.
The basis in the property to the new LLC is that of the partner who received it in distribution. That is the value the asset gets added to the new LLC at and depreciation starts over from there. If the value of the property was in excess of the partner's basis prior to the distribution, then the value is limited to the value of the partner's basis in the partnership. See Partner's Basis for Distributed Property in Publication 541 from the IRS for more details.
@Venkatesh
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
