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Commercial Real Estate Partnership - 1 of 2 brothers dies

  • 1.  Commercial Real Estate Partnership - 1 of 2 brothers dies

    Posted 09-25-2019 09:09
    Hi all,
    I have client that is in a partnership with his brother.  Both brothers are single, with no beneficiaries other than the other brother.

    One commercial building was sold in a prior year in an installment sale, the other building is still held in the partnership.

    It seems the partnership does not automatically terminate upon the death of the brother as the surviving brother continues to manage the property.

    Easy enough to allocate income from the dead brother to his final individual return and the balance of the year to his Estate.

    But the building will step-up in basis for the dead brother's half ownership.

    If I terminate the partnership as of the date of death, should the partnership buy out the living brother and have the entire building in the dead brother's Estate?

    Or does the Estate and living brother continue ownership of the building 50/50?

    Or continue the partnership with the Estate of the dead brother and living brother while the balance of the Estate is sorted out?

    Thank you for your input.

    Martha Berghahn

    Martha Berghahn
    Sparta NJ