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

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.


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.


  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


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


Learning Objectives

Upon completing this webinar, you will be able to:

  • Distinguish between IRC 734 and 743 basis adjustments.

  • Establish whether IRC 755 impacts basis adjustments and allocations.
  • Ascertain the proper procedures for making and revoking an IRC 754 election.
  • Determine the tax consequences of making an IRC 754 election.
  • Identify when a downward basis adjustment is mandatory.


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

Mr. Patch works with clients on a broad range of federal income tax matters and is responsible for the development and delivery of firm training on partnership taxation. Before coming to BDO, he worked in the National Tax Practice Pass-Throughs Group at KPMG.

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

Ms. Wiesen specializes in partnership taxation, specifically the use of partnerships and limited liability companies in domestic and cross-border mergers and acquisitions and restructurings. She joined Deloitte Tax LLP’s National Tax Office from Cadwalader, Wickersham & Taft LLP where she was an associate in the Tax Department, focusing on matters relating to the taxation of financial instruments and derivatives.

EA Credit

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EA Processing $5.00


CPE On-Demand

Includes video streaming of full program plus handouts (available within a week of the live webinar).

Strafford is a NASBA-approved CPE provider for On-Demand webinars.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: Printing and reviewing Program Outlines and materials.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: QAS Self-Study.
  • Prerequisite: 

    Three years+ business or public firm experience at mid-level within the organization, preparing partnership and partners’ tax forms. Specific knowledge and understanding of partnership taxation, partner capital accounts, basis adjustments and tax consequences resulting from partnership distributions, and IRC 754 elections, familiarity with IRC 755 allocations and tiered partnerships.

On-Demand Webinar & CPE Processing $182.00

Recorded Event

Includes full event recording plus handouts.

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $147.00

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Recorded Audio Download (MP3) $147.00

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Program Materials

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Strafford is an IRS approved continuing education provider and this course is approved for 2 enrolled agent (EA) credit hours.

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