Bonus depreciation for transferred deeds

[Mo Casa]

Hi folks,

I'm exploring a scenario and would be grateful to hear some perspectives:

John is a member of Abc LLC that consists of four partners that own and operate real estate properties. John, as an individual, currently owns a rental property under his personal name that he intends to sell to the Abc LLC. It's worth noting that John has already claimed a 100% bonus depreciation on this property in 2022. If John were to transfer the property deed to the Abc LLC (an entity he still belongs too), would this type of transaction allow the other three partners of the Abc LLC, apart from John, to benefit from bonus depreciation on the property for the current year (2023)?

Of course, assuming each individual meets the general requirements of the bonus depreciation program (e.g., active material participants).

Thanks in advance!

[Ashish Acharya]

If you sell to the partnership, the deprecation can be taken again.

If you are just contributing to the LLC as a partner's contribution, you cannot take the same 100% bonus depreciation.

This is way more complicated than you think it is. Talking to your CPA would give you a clear idea.