743(b) Step Up Adjustment

Forum|Forum|2 years ago
May 24, 2023
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I run a partnership that acts as a vehicle for investments. We bring together investors to invest in various ventures. Some of those investors are individuals, some are LLC's, and some are other partnerships.

Recently one of those partnerships had a partner pass away. As a result, that partners interest in the partnership he was part of will pass to his estate.

My question is, would I need to do a Step Up 743(b) adjustment within my partnership, or would it just happen within their partnership? I understand I would have to provide the valuations so they could do the step up in basis, but I am trying to understand if I would make these adjustments on my balance sheet as well?

Best answer by Mike9241

there has been no transfer of interest at your partnership level. if that partnership owned 10% of your partnership before he died it would still own 10% afterward until some other event occurs there is no adjustment for your partnership to do. the other partnersip may need details of what your partnership owned on the date of death and their fair value. the only disposition of a partnership interest occurred at their level when the deceased partner's interest was transferred to his estate.

Mike9241Answer

FLAnneAuthor

Thank you so much. That is how I interpreted the tax law. However, our previous CPA made adjustments on our level as well, which seemed odd. I appreciate the time you took to reply!