In New York, I am responsible for the tax filing of a partnership. The partnership holds an operating lease (master lease) for a ground-floor retail space in New York and subleases it to a restaurant. Its operating model is: pay the master lease rent, collect sublease rent, and distribute all net income to the partners at year-end. This arrangement has been profitable for the partnership, but like other leasing businesses, it faces routine risks in the future. The original plan was to terminate the partnership when the master lease expires in about 10 years. However, one partner passed away, and the executor has informed the general partner (GP) of a desire to make a Section 754 election on the partnership's tax return to utilize the stepped-up basis. I began thinking about the operational details. The partnership's only asset is the master lease, but this lease is not recorded on the books. I can estimate its value by calculating the net present value (PV) of the lease, but I am unsure how to handle it other than providing it to the executor. My first question is: In general, when should an operating lease appear on an entity's books?