Equipment distributed to partner

[jklcpa]

It's my turn for the mental meltdown and brain fog.

Partnership non-liquidating distribution to one partner of a depreciable asset that should not result in a taxable transaction. Partner has enough basis that this will not create a gain for him. Also, asset was purchased by the partnership, not contributed by any partner. No debt against it.

FMV $10K, NBV $2K.

Aside from how to make my software remove the asset without it flowing to 4797,  do I have a distribution of the $10K FMV and an $8K gain not recognized entered as an M-1 entry?  Is that where this goes?

Sorry, I know this is a totally simple question. Told you, total brain fog and a weird headache too. I've been like this since yesterday as a reaction to the covid vaccine. It was so bad yesterday that I just moved all the remaining simple returns up in the queue and did nothing but print and assemble. I figured I couldn't wreck anything too bad doing only that! 

[Lion EA]

I had a headache, also, after second vaccination. Started the first night and was still there the next morning. When I gave up and took a long nap (at least four hours -- during tax season) it went away. Try some Tylenol and a good night's sleep. And, I'm glad you got the covid vaccine!

But, your question is over my head. What you said sounds logical to me, but I have no idea if it's correct. Knowing your expertise, it's probably right.

[Lee B]

I took an IRS online free class about this area last August, so I double checked my thinking with the Tax Book:

1.  The equipment comes out with the PTS adjusted basis, which is assumed by the partner.  FMV of the equipment is not involved.

2. The PTS NBV of the equipment reduces the partners capital account.

Easy peasy

[DANRVAN]

The distribution is reported on K-1 at book value, basis to the partnership immediately before the distribution.  IRS suggest, but does not require FMV on K-1.

 

[DANRVAN]

11 hours ago, jklcpa said:

do I have a distribution of the $10K FMV and an $8K gain not recognized entered as an M-1 entry?  Is that where this goes?

There is no entry for fmv, just show distribution at BV.

[jklcpa]

Thank you, all.  I knew it was simple, and my quandry started with getting the asset off the depreciation schedule without it being only out of service. A former member from here gave me that easy solution over on the Drake forum.

Everything has been harder where simple tasks are mountains to climb, but I'm trying to get through it.   I'm going back to printing and stapling because I can't make too much of a mess of that.