Partnership and Basis Step Up

[BulldogTom]

Please double check my thinking on this.

PS (farming) forms with three partners about 15 years ago. Partner 1 holds the PS interest as communitity property. He dies and wife now has partnership interest. The only asset of the ps is land which has not been farmed since partner 1 died about 5 years ago. The land was never deeded to the ps after it was purchased. It is still titled in each partner's name. It was always the intent of the partners to treat the land as an asset of the ps, and it has been included on the 1065 balance sheet every year.

Can the sale of the land be treated as sold by the ps?

I am pretty certain that the land does not get step up basis, but the PS interest does. However, since the land is the only asset and there are no liabilities or other encombrances, the value of the ps interest is 1/3 of the value of the land at partner 1 dod?

Your thoughts are appreciated.

Tom

Lodi, CA

[jainen]

>>It was always the intent of the partners to treat the land as an asset of the ps<<

In that case, I recommend they initiate the transfer as soon as convenient, because until they do so their intentions will be unfulfilled.