Client and his wife have a 20% interest in a mobile home park. His dad has the other 80%. Dad dies and client gets dad's 80%. Client and wife divorce. Client agrees to give ex 1/2 of his 80% for a now 50/50 split. He continues to manage and maintain the MHP and take all the profit/loss. However, it must be sold within 10 years. She is not on the deed.
If he sells it, would her basis be 1/2 of his basis and her sales price 1/2 of the total, and would he report the same gain or loss as she would?
However, if he attempts to buy her out, her gain would be the same as before, and he would get no step-up in basis. When he sold the MHP, he would have to report the total sales price and would only get 1/2 of his basis.
Anyway, please let me know where I'm missing or adding something.
All help is much appreciated