Partnership Installment Sale of Single Asset

[JohnH]

Taxpayer & spouse are equal partners in a partnership which has owned a commercial building for many years.  They have been filing partnership returns annually and distributing the net income/loss to one another via separate K1/Sched E on their MFJ  return..  The partnership is entering into an agreement to sell the building on an installment sale.  They want to simplify their tax return filing and eliminate the 1065/K1/E combo if possible, since the installment sale reporting will continue far into the future.  Any thoughts on the simplest way to accomplish this?

[BHoffman]

Distributing the property and liquidating the partnership would be a thought.  The sale agreement would need to be modified so that the sellers are the TP and Spouse, and the title should be transferred - all before the sale is completed.  

That can be simple or complicated, depending on many things - hot assets, outside vs. inside basis, cash distributed along with the property, debt relief, etc.

I like this article regarding partnership distributions, and it gives lots of examples concerning liquidating distributions:

https://www.forbes.com/sites/anthonynitti/2015/01/20/tax-geek-tuesday-understanding-partnership-distributions-part-1/#621811aa2c11

 

[JohnH]

I appreciate the thoughts and the link. I was also thinking the title should be transferred before the sale is completed.  I'm assuming that should be via a liquidating distribution, since the partnership essentially ceases to exist once the building is transferred.  Glad to get that confirmation.