K-1 Reporting Requirements For Partner Transfers

Question
If a partner transfers his interest into his trust, should there be two K-1 forms issued? Also, is Form 8308 required to be filed? I’m the accountant for this client.

Answer
The investor transferred assets into the trust during the year and thus there was P&L allocated both to the individual and the trust? Please confirm. If this is the case, then two separate Schedule K-1’s would be issued: 1 to the individual and the other to the trust.

As for the 8308 Form, does the partnership sale include unrealized receivables or inventory items (Section 751 Property)? If not, then it’s not required.

References: IRC Sections 652, 662, 751
State: Michigan

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