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IRC Section 754: Partnership and Pass-Through Entity Basis Adjustments

Mastering Election Rules and Tackling Complex Decisions for Distributions From Partnerships and Sales of Partnership Interests

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, October 4, 2018

Recorded event now available

This course will provide partnership tax advisers and compliance professionals with a practical guide to the mechanics of the Section 754 election. The panel will outline best practices for making the Section 754 election, tax implications of the election, and when to make—and when to avoid—the election.

Description

Section 754 is a complex and critical part of the Code for advisers and tax attorneys involved in partnership tax matters. Section 754 sets the framework for an election that allows the partnership to adjust the basis of its assets under certain circumstances. The election provides for a “rebalancing” of partners’ basis in partnership assets and is an integral part of partnership tax practice.

Tax advisers and attorneys must understand not only the rules but also the practical how, why or “why-not” involved in making a Section 754 election. Further, advisers must be prepared to perform the complicated adjustment calculations that the related basis adjustment provisions of Sections 734 and 743 require to track inside basis and depreciation to reach the proper reporting on partners’ individual Schedules K-1.

Listen as our panel of veteran advisers gives you a drill-down on Section 754, sharing their experiences working on complex partnership tax issues to help you understand, identify and avoid missing Section 754 election opportunities. The program will offer concrete examples to illustrate the potential benefits and detriments of a Section 754 election.

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Outline

  1. Section 754 key points
    1. Section 754 overview
    2. Election decision process
      1. Reasons
      2. Evaluating implications
        1. Step-up
        2. Step-down
  2. Section 754 election procedures, filing and notification requirements
  3. Common computation challenges with Sections 734(b) and 743(b) adjustments
  4. Allocations of basis adjustments under Section 755

Benefits

The panel will review these and other relevant points:

  • How to make a Section 754 election, and the practical pros and cons
  • How to calculate the inside basis adjustments under Sections 734 and 743
  • How to allocate the basis adjustments under Section 755
  • How to avoid common basis adjustment mistakes in calculations and reporting

Faculty

Mills, Darren
Darren J. Mills, Esq., CPA, ChFC, CLU
Attorney
Mills Law Office

Mr. Mills has more than 20 years of experience advising both middle market companies and large multi-nationals...  |  Read More

Spiro, Michael P.
Michael P. Spiro
Partner
Finn Dixon & Herling

Mr. Spiro chairs the firm's Tax group, where his practice focuses on providing federal and state tax...  |  Read More