Partner buyout

[LouD]

2 person LLC with commercial building rental as only asset. 25% partner agrees to sell her interest to 75% partner and I want to make sure I'm not missing anything.

I'll do a short-year return 1065 return thru date of sale for the LLC and check the Final Return box on page 1.

The LLC will live on and go on the remaining 100% partner's personal return as a Schedule E rental property - do I need to get a new EIN for the LLC or because it wasn't a technical termination (only 25% ownership changed hands) can the LLC keep the EIN or does checking the Final Return box mean the IRS cancels that EIN?

Also want to make sure I'm doing this correclty going forward - I'll be tracking the commercial building for the new 100% owner with 2 different cost basis - the original cost basis for her 75% intial ownership stake and a new cost basis for what she's paying for the remaining 25% stake.

Anything else I should be aware of? Thanks for the help!

[michaelmars]

if possible have the remaining partner have his wife own 1% as non manageing member, this keeps it in a 1065 and off of the 1040. as for the outside basis, it gets booked on the partnership returns with the additonal depreciation allocated only to the parnter that did the buy out, in this case the 75% partner gets it all so there is no reason for special allocations. [if there were 6 partners for example and only 2 bought out one then its a special allocation and a p.i.a. to get to flow in atx]. don't forget that some of the increase must be allocated to land. the increase in basis is a 754 election which must be made and there are some questions about it on the 1065.

i think others here have disagreed with me but i handle over 800 partnerships with partners changing all the time and i never get a new id number and thre is an option to do a pro rata allocation of income for the outgoing partner, i never do 2 returns.