Dissloving a Partnership - It's Actually an LLC

[Yardley CPA]

In an earlier post (copied below information from that earlier post) I indicated a partnership was looking to dissolve.  It's actually an LLC.  Would that make any difference to the below scenario:

 

Newer client.  He and his wife were in a Pennsylvania partnership with one other individual (we'll call the individual, Joe).  They have one rental property.  A small amount of income and expenses are paid through the partnership for the property.  All income is distributed and expenses paid equally to each partner (1/3 to Client, 1/3 to Client Wife, 1/3 to Joe.)  All the partners equally contributed $100,000 each ($300,000 in total) to purchase the rental property.  They would like to dissolve the partnership and continue renting the property in the same fashion outlined above.  I assume they would both attach a Schedule E to their respective returns when that happens?

I have very little experience with partnerships and would appreciate any input.  I have found the forms needed to obtain a tax clearance certificate from Pennsylvania.  It indicates that a distribution of assets schedule and a copy of the federal Schedule D must accompany the application of tax clearance.  Since they would like to continue renting the property together after dissolving the partnership, what assets are being distributed?  What would be on Schedule D?

Thanks for your input!  Appreciate anything you can share to help me. 

[Lee B]

Since the same Rules and Regulations apply, nothing is changed.

 

[DANRVAN]

An LLC is a creature of state law and has nothing do to with how an entity is taxed, whether it be a corporation, partnership or a sole proprietor.

[Randall]

9 hours ago, DANRVAN said:

An LLC is a creature of state law and has nothing do to with how an entity is taxed, whether it be a corporation, partnership or a sole proprietor.

I thought by default, a SMLLC was taxed as a sole proprietorship and a MMLLC was taxed as a partnership.  Or you have to actively elect with the IRS for the LLC to be taxed otherwise.

 

 

[mcb39]

You may be putting the cart before the horse.  The LLC is the cart and the horse is the tax entity.

[Abby Normal]

It's still a partnership, they're just losing the liability protection of the LLC. If it's not expensive to keep the LLC, I would recommend they keep it. Also, they would need to go through a title change to put the property in their individual names, or a new partnership name (non-LLC).