Navigating the 754 Election Self-Study

Summary

The §754 election is a tool that allows partnerships to adjust the basis in partnership property when a partnership interest is transferred or when a partnership makes certain distributions. In certain circumstances, without the election, newly admitted partners may not be able to receive the benefits of depreciation and/or amortization deductions and may have more gain to report when the partnership disposes of appreciated assets. With a §754 election, the partnership steps up the inside cost basis for new partners. The result is a balancing of the inside cost basis and the outside cost basis for the impacted partner. The newly admitted partner is then allocated depreciation and/or amortization deductions and has a reduction in capital gains when the appreciated property is sold.

The material will explore the mechanics of the §754 election, its purpose, benefits and downside. The tax professional will gain the expertise necessary to understand the tax rules when the partnership makes the election.

Objectives

Upon completion of this course, you will be able to:

• Identify why a partnership makes a §754 election
• Describe how a partnership makes a §754 election and reports it

Course Details

This course includes an e-book and exam questions to help you earn CPE. CPE is issued after the exam is successfully completed.