As is normally the case, partnership tax issues are complex regardless of the size of the transaction.
What you actually have here is a division of an LLC (under Section 708) with rules that determine which LLC is the continuing and which is the divided.
So here are my thoughts:
- For the old LLC, for the property that was transferred to the new LLC, just show this as a sale with no gain or loss. This will technically be treated as an assets over transaction.
- For the new LLC, the property that was "divided" / transferred, this property will take the same basis and depreciation period as the old; essentially stepping into the shoes type transaction.
- There are reporting requirements for each LLC.
- Due to the specific reporting requirements, I would suggest you consult with a tax professional to make sure that the reporting is correct. This may require filing an extension and possibly done post April 15th. However, keep in mind, that the partnership returns are due 3/15 so an extension for these returns will need to be done as well, however, no tax due.
- If you want to try and tackle this on your own, Google partnership division.
- Also keep in mind, that since there are specific reporting requirements for each LLC, you will most likely need to paper file both partnership returns since you will not be able to attach the appropriate attachments within TT Business.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
