Is there a way for partners to transfer real estate from one partnership (LLC2) deemed to be a capital distribution from another partnership (LLC1) without having to report a taxable capital gain?
Situation - PS/(LLC1) is owned equally by 4 partners with one partner (P1) having large capital account balance. 3 of these partners (P1, P2 and P3) also own another (LLC2) holding real property. The partners in LLC2 would like to give P4 100% of the real property in LLC2 as if it is a capital distribution from LLC1. Would there be a way to do this without any current tax consequence? Note: Even though P4 is not technically an owner in LLC2, the owners externally consider him "like" an owner. They just never did anything formally to add him as an owner.