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How complicated is it convert from a partnership to single member LLC, where the the spouse transfer partnership interest to the other spouse?


The BIDaWIZ Team's Answer:

Not complicated at all when spouses are exchanging partnership interest. The wife can gift her partnership interest to the husband. No profit or loss is recognized. You file a final partnership tax return for the period ending as of the transfer date/month. The LLC becomes disregarded thereafter. So you will file the activity for remaining year on Schedule C. All assets of partnership will be reported on Schedule C at the same values as they were in the partnership. This is referenced in IRS Publication 541 and IRC Section 701(e)(3).

The BIDaWIZ Team



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