IRC 754 Elections for Tax Counsel: Mastering Structuring Considerations of Basis Adjustments

Navigating Complex Basis Rules and Avoiding Pitfalls in Section 754 Elections

Recording of a 90-minute premium CLE/CPE webinar with Q&A

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Conducted on Thursday, June 4, 2020

Recorded event now available

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Course Materials

This CLE/CPE course will provide tax counsel with comprehensive guidance on the 754 election for partnerships. The panel will discuss the basis adjustment rules associated with sales, transfers, and partnership interests or property distributions; review the impact of the Section 754 election for individual partners and the partnership; and discuss structuring transactions to avoid unintended tax consequences.


Understanding the Section 754 election and its related basis adjustments is a critical skill for tax counsel serving as advisers to clients owning or managing partnerships. The election allows adjustments on the "inside basis" of assets the partnership owns.

The basis adjustment can have a significant impact when a partnership has an existing 754 election and admits a new partner, has one partner sell a partnership interest, or when the partnership makes a distribution to a partner. The election and adjustments can have different impacts on different partners, so tax advisers need to fully grasp the tax implications of making the election and utilizing the optional basis adjustments.

Tax advisers must understand not only the rules but also the practical calculations, allocations, and reporting mechanics of the 754 election. Counsel may be called upon to help make essential decisions with basis and depreciation issues and to help make complicated adjustment calculations.

Listen as our authoritative panel of tax advisers guides counsel through the basis adjustment rules, discusses the impact of the Section 754 election on individual partners and the partnership, and provides best practices for avoiding potential pitfalls of the election.



  1. The mechanics of a Section 754 election
  2. Inside and outside basis issues
  3. Ability to make 754 election due to a transfer
  4. What happens under 743(b) when a 754 election is made?
  5. 755 Basis adjustments
  6. Partnership technical terminations
  7. Benefits


The panel will review these and other key issues:

  • Mechanics of making a Section 754 election at the partnership level and understanding "inside basis" vs. "outside basis"
  • Benefits and disadvantages of making the 754 basis election
  • Rules governing step-up and step-down basis adjustments
  • Rules for allocating basis adjustments
  • Impact of the 754 election on individual partners and the partnership
  • Common pitfalls in basis adjustments, and what can practitioners do to avoid these pitfalls?


Lentine, William
William C. Lentine

Warner Norcross + Judd

Mr. Lentine is experienced in corporate tax matters, partnership taxation, mergers & acquisitions and estate...  |  Read More

Romano, Matthew
Matthew R. Romano, CPA, MST

Tax Partner

Mr. Romano maintains significant expertise with the issues and trends related to investment company taxation and has...  |  Read More

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