I transferred my rental property to a newly formed partnership in a non-taxable disposition. How do I report this?

Neither ... if this was transferred from your personal return Sch E  to a partnership  then on the personal return you will indicate the asset was converted to personal use to stop the depreciation.   Then the asset is entered on the partnership return as a new asset to the business... seek out professional assistance if you are not sure of what you are doing. 

you can read page 12 of the 1065 instructions for 2021 but a agree a pro is best.

https://www.irs.gov/pub/irs-pdf/i1065.pdf 

you'll also probably need a pro if the property is sold because a special allocation of the gain is required.

On the SCH E convert the property and all it's assets to personal use, effective one day before it's transferred to the partnership. This takes the property out of service and stops depreciation on that date.

When entering in the 1065 Partnership returns, you will need to adjust the cost basis of the structure and any other depreciable assets, by the depreciation already taken on your personal return. Note that since land is not a depreciated asset, the value of the land will not change.

If you're not knowledgeable on this, seek professional help. Doing things wrong, can (and will) cost you dearly down the road; most likely in the year you sell the property. Especially if your state also taxes personal income.

I will 4th the suggestion to get some professional guidance in this area.

Partnership tax can become complicated very quickly, and you just entered that complicated zone.

While it appears that you are more interested on issues related to the personal tax return, I have a few comments on the partnership component:

• You indicate "I" transferred "my" rental property to a newly formed partnership.  
• You don't indicate how many partners, relationship to the new partners, etc.
• When contributing property to a partnership, this brings a number of tax issues into the picture
  • The partnership "steps into the shoes" of this property so make sure you have your current depreciation schedules.
  • You will also need to know the FMV of the property.  This comes into play in determining the economics of the partnership interest and also allocation of gain / loss upon disposition of the property by the partnership
  • There will most likely be a special allocation with respect to depreciation.  Although you don't mention who the other partner(s) is, which will impact this tax provision.
  • Is there debt associated with the property?  How is that being handled?
• You technically don't have a "non-taxable disposition".  You have a transfer of the property where there is no gain or loss.  You technically still own a portion of this property through the partnership.

Maybe you have already decided to get help on the partnership side of the transaction, if so, excellent.  If not, I strongly recommend it.

As a scientist and mathematician not an accountant, my reply needs to be vetted

The conversion to personal use a day before LLC formation is an excellent idea.

I thought using the depreciated-to-date basis was good despite the reduction in future rate of depreciation (time is money) until I found this in the 1065 instructions:

You must depreciate MACRS property acquired by a corporation or partnership in certain nontaxable transfers over the property's remaining recovery period in the transferor's hands, as if the transfer had not occurred. You must continue to use the same depreciation method and convention as the transferor. "

Thus, if I use the original SCH E cost  on Line 19h (residential rental property) of Form 4562 and enter the prior depreciation in the next to last column (labelled "prior depreciation") on Form 4562 Depreciation and Amortization Report worksheet, then the math works and above paragraph is followed.  Presumably, someone will notice when sum of prior and current depreciation equals the cost and stop the depreciation.

However, TurboTax will not allow me to enter the prior depreciation in said space. So I labelled the asset "house full depreciated in June 2039" to remind someone to stop the depreciation in June 2039 if either my wife or I are still alive then. More likely, inheritance ends the depreciation.

I think this technique would apply to a 1031 Swap too with an additional asset entry for difference in cost between old and new house.

The key concept is the space labelled "prior depreciation." Please comment.  Jim

That should work.  

@jimmcfarlane