I received a schedule k-1 for an LLC partnership that was dissolved at the end of the year when assets were exchanged for equivalent shares in an existing REIT. My question is: how do I answer the question "Describe the partnership" in Premiere Turbo Tax? It would appear that I should check "This partnership ended in 2023", but I am afraid that this may turn out into a taxable disposition of assets, which it should not be. Is there any place where I can indicate that the assets were exchanged?
After you indicate that the partnership ended, on the next screen you can indicate that the disposition was not via a sale, then you won't have to deal with gains or losses on sale of the partnership assets:
Thank you. I noticed that when I do that, it marks the disposition of the assets as "gifted". I am tempted to just say "no reply"
Yes, you can change the response to the type of disposition that applies. No Reply is a valid choice.
I think that the options could be changed. Marking "disposition was not via a sale' show that the interest in the partnership was gifted (see K1P Addl Info 2 worksheet). While this most likely does not change taxes, it could incur in gift taxes now or limit lifetime gift taxes in the future. This situation has been this way for years as other have reported it before and I even found it in my 2015 taxes when I faced a similar situation.