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Susan10
Level 2
March 1, 2026
Question

Partnership-sale of rental property-one partner has stepped up basis

  • March 1, 2026
  • 1 reply
  • 7 views

Partnership has one rental property which was sold in 2025. Partnership consists of three partners, one of which is a trust with a stepped up basis. Deprecation schedule has four assets-building and land that apply to all three partners and building and land that are the step up amounts which only apply to the partner with the inherited interest. For the sale how do I get the additional basis to just the partner it applies to?

1 reply

K
Karen_pdx
Level 5
March 3, 2026

You should be able to allocate the overall gain using screen 29 Special Allocations, including the Sec 1231 gain and the unrecaptured Sec 1250 gain items. I don't believe there's a way to allocate proceeds & basis by partner, but you can allocate the overall gain.

S
Susan10Author
Level 2
March 3, 2026

Thank you, I was hoping not to have to do the calculation by hand, but that appears to be the answer. It was made a little more complicated by the fact that due to the stepped up basis one partner had a loss while the other two had a gain, so the 1231 element did not come through correctly on California-more overriding. 

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