After talking to my tax professional, this is how I accomplished this with TurboTax Business Desktop.
- In the tax return with the "old" partnership, enter that you disposed of the property by selling it.
- For each asset on the depreciation schedule, enter a rough estimate for what the item was sold for, and on the next screen the software will say what was your gain or loss.
- Do math to calculate a zero gain (your rough estimate +/- what TurboTax calculated your gain/loss as)
- Press back, and enter in the number you calculated. TurboTax should say that you hand no gain or loss with the sale of the asset.
- In the tax return with the "new" partnership, enter every item one by one into the new depreciation schedule.
- Enter the "sale" date as the date that the new partnership started. The date of every asset on the depreciation schedule will also be this same date.
- You'll need to make sure that you chose the same asset description for each asset, so that the depreciation convention / method is the same (ie Rental Real Estate Property | Residential Real Estate).
- The software will ask if you had any prior year depreciation. Click yes, and enter in the accumulated depreciation (far right column of the depreciation schedule) from the "old" partnership for that asset.
- Review the depreciation schedules from the old and new partnerships IN DETAIL, to make sure that the information looks like it transferred correctly.
- With this method, the depreciation that you've taken with the "old" partnership will transfer to the new partnership, and there will be no profit/loss to claim from the "sale" of the property.
