The same entity that relinquishes property must acquire property to qualify for an exchange. If some of the partners simply want cash and do not intend to exchange, they can be cashed out when the sale closes and the partnership can remain intact and acquire property. However, if various partners want to go their separate ways but still want to exchange, then the only real option is for the partnership to deed the appropriate percentages to the various partners, before the sale closes. There is a risk in this, however, in that §1031 is for property HELD for productive use in business, trade or for investment purposes. If the partnership deeds to the individual partners, has the property then been "held" by the individuals? Again, talk with your CPA or tax advisor.
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