Death of LLC Member, Trust becomes new Member

[user17692919984]

So my mom passed away in July, 2025.  She and I are both members of the LLC.  Her ownership interest will be assumed by her Trust which now has an EIN.  How do I enter these things in Turbotax Business?  There seems to be a place to add a new partner and even to indicate that the new partner is not a person, but is a trust.  Do I put the EIN where the SSN goes?  Do I put the trust name in the First Name box?  It's a bit unclear.  Will there be a place to indicate that one partner has passed?  Thanks for your help.

[PatriciaV · Accepted solution]

Here are the steps to report the change in ownership of the LLC:

1. Open your Form 1065 return using TurboTax Business and go to Business Info >> About Your Business.
2. Change the answer to the last question "Has an Ownership Change" by clicking Edit then answering "yes."
3. Under Partner/Member Information, edit the info for your mother. 
4. Check the box "This member left the company this year."
5. Add the Trust as a new member of the LLC (leave the name blank - you will need to add this later).
6. Enter the EIN in the format XX-XXXXXXX.
7. Check the box for "This member is not a person" and choose "T-Trust" from the drop-down box.
8. Continue through the interview to the Change of Ownership page.
9. Indicate there was one change during the year and enter the date the trust was added to the LLC. TurboTax will allocate the income for each member based on this date.
10. On the Profit Percentages page:
    1. The outgoing member would have zero for the After Percentage.
    2. The new member would have zero Before and an After Percentage equal to the outgoing member's Before number.
    3. Total Percentages for both columns must equal 100%.
11. Indicate this was an Exchange with no basis adjustment.
12. Continue to the end of the Business Info section.

Now check your entries using Forms Mode.

1. Open your return and click the Forms icon in the TurboTax header. 
2. In the list of Forms in My Return on the left, scroll down and look for Sch K-1 Wks. 
3. Click the form name to open it in the large window. 
4. Use the embedded scrollbar at the right side of the form to find the entry for the trust (or use page-down).
5. You may need to re-enter the EIN in the "ID" box.
6. Enter the trust name for "Entity Name" and delete any entry for First/Last Names.
7. Be sure there is no red exclamation mark beside the form name in the form list. Click the Errors icon above the forms list to open a footer below the open form and see an explanation of any remaining errors.
8. Resolve any errors related to the Sch K-1 Wks form.
9. Click Step-by-Step in the header to return to the main screens.

[Mike9241]

There is something else. The LLC, if it did not elect to be taxed as an S-Corporation, may elect a Section 754 adjustment for the Trust's share of assets, formerly owned by the deceased partner.

see this webpage. The election is voluntary

https://legalinsights.us/what-is-a-section-754-election-and-how-does-it-work/ 

[user17692919984]

Step 11, you've mentioned no change in basis? The LLC holds a rental property and I think we would want a step up in basis on the property.  Another tax expert has mentioned it is possible to do a section 754 election.  Is this different than what you are referring to about change in basis or ...?  I'm thinking we should do a 754 election.  Does that sound correct?  Thanks for your input and for the detailed explanation you've already given.

[RobertB4444]

A 754 election will get a step up in basis and in this case and others like it is an extremely good idea.