IRC Section 734 Adjustments: Applying the 754 Election to Distributions of Partnership Property

An Advanced Case Study of Calculations and Considerations

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


Conducted on Thursday, August 10, 2017

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will equip tax professionals with the tools and understanding to properly analyze the impact of a Section 754 election. The panel will offer a detailed case study and illustration of how to calculate the Section 734(b) basis adjustment(s) to assets retained by the partnership after a distribution to a partner.

Description

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

Section 734(b) basis adjustments can have a significant impact when a partnership has a 754 election in effect and 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 not only understand the rules but also the practical calculations, allocations and reporting mechanics of the 754 election, and especially of the Section 734(b) basis adjustments. Failure to understand the “moving pieces” of the optional basis adjustments under Section 734 can result in unnecessary tax issues for the individual partners—some of whom might be your clients.

Listen as our panel of veteran advisers provides practical guidance in the form of a detailed case study on the ins-and-outs of the Section 734(b) adjustments and allocations, leaving you prepared to advise on the planning and compliance tasks of this complex area of partnership taxation.

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Outline

  1. The mechanics of a Section 754 election
  2. Basis adjustments under Section 734(b)
  3. Negative basis adjustment
  4. Positive adjustment
  5. Allocation of adjustment under IRC 755
  6. Case study and illustration
  7. Special rules
  8. Planning considerations

Benefits

The panel will review these and other key issues:

  • Making a Section 754 election at partnership level and understanding “inside basis” vs. “outside basis”
  • Understanding optional basis adjustment under Section 734(b)
  • Calculating the Section 734(b) basis adjustment on retained partnership assets
  • Allocating the Section 734(b) optional basis adjustment
  • Reporting Section 734 basis adjustment on a partner’s tax return
  • Planning considerations and consequences of 734 basis adjustment

Faculty

Patch, David
David Patch
Managing Director, National Tax Office Partnership Group
BDO USA

Mr. Patch works with clients on a broad range of federal income tax matters and is responsible for the development...  |  Read More

Wiesen, Dina A.
Dina A. Wiesen
Senior Manager, National Tax Office, Passthroughs
Deloitte Tax

Ms. Wiesen specializes in partnership taxation, specifically the use of partnerships and limited liability companies in...  |  Read More

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