Partner in a real estate partnership dies with a negative capital account. Decedent partner's child inherits his interest. Partnership makes 754 election.
What happens to negative capital account? I am thinking that child assumes negative capital account which then gets netted with stepped up basis due to 754 adjustment? Or does child's capital account start fresh from zero and estate of decedent partner has to pick up income? Literature I've researched does spell this out.
Thanks to you all out there as always.
Paul Herman CPA 707 Westchester Avenue, Suite 302 White Plains, NY 10604 Phone (914) 400-0300