We transferred 4 rental properties into 4 disregarded LLCs and then have a Master LLC to file the 1065. As an example one property has an adjusted basis of $65,000 (cost of $115,000 less $50,000 depr). FMV of $225,000.
On the 1065 initial year, it is my understanding that the Schedule L would show the property at $115,000 less $50,000 depreciation netting the $65,000 AB. On quickbooks pro the same has been reflected so books are same as tax basis thus far.
Given this, the schedule M-1 would have no differences and the Schedule M2 would also be showing the adjusted basis of $65,000 as property contributed.
Would this be correct or should the books reflect the FMV of $225,000? If $225,000 is reflected in QuickBooks Pro what would you base depreciation on, the FMV or what was actually taken on the 1065? If it is based on FMV then the schedule M1 would have an amount in line 4a for the different depreciation amounts. Is this correct?
Thanks in advance for responses!
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Ok. That simplifies many things.
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