Cost basis in an MLp after death
Since cost basis is constantly being lowered in an oil MLP due to return of capital, does cost basis step up to to Market value on date of death, as in regular stocks,regardless of the basis computation by the MLP that is reported yearly on the K-1?
Permalink Submitted by mk foss on Thu, 2012-06-14 17:27
Yes. This is analogous to depreciation on a business property – the old accumulated depreciation goes away and the asset is treated as purchased at fair market value on the date of death.
With a partnership, you should inquire as to whether a Sec 754 election has been made. If so, the partnership will need to recalculate deduction items based on cost for the partnership interest after death. I wouldn’t think that an MLP would make a Sec 754 election, but it’s good practice to check.