What triggers a 754 election?
Section 754 allows a partnership to make an election to “step-up” the basis of the assets within a partnership when one of two events occurs: distribution of partnership property or transfer of an interest by a partner. The election is made by filing a written statement with the tax return.Click to see full answer. In…
Section 754 allows a partnership to make an election to “step-up” the basis of the assets within a partnership when one of two events occurs: distribution of partnership property or transfer of an interest by a partner. The election is made by filing a written statement with the tax return.Click to see full answer. In respect to this, what is the 754 election?Under Section 754, a partnership may elect to adjust the basis of partnership property when property is distributed or when a partnership interest is transferred. The purpose of a Section 754 election is to reconcile a new partner’s outside and inside basis in the partnership.Secondly, should I make a 754 election? Partnership Taxation: What You Should Know About Section 754 Elections. A Section 754 election can be a favorable tax efficiency tool that is unique to partnerships (as compared to corporations). However, the complexity, administrative burden and changing economic environment should always be considered carefully. Also know, when should you make a 754 election? ❖The Section 754 election must be made before the due date of the income tax return (including extensions) for the year in which the transfer occurs [IRC Sec.Can you make a late 754 election?Currently the only remedy for failing to make a proper section 754 election is to request “9100 relief” to make a late section 754 election either: (1) Through automatic relief, if the error is discovered within 12 months pursuant to § 301.9100-2 of the Procedure and Administration Regulations; or (2) through a private
