IRC Section 743(b) Basis 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 Tuesday, December 15, 2015

Recorded event now available

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Program Materials

This webinar will cover how, and whether, to make a basis adjustment under Section 743(b) when there has been a transfer of a partnership interest. This is an election the partnership can make when there is a sale or exchange of a partnership interest, or upon the transfer of a partnership interest to an estate or beneficiary upon the death of a partner. It changes the partnership’s basis in its assets with regard to the transferee/new partner.

Description

Making proper decisions about electing a basis adjustment under Sect. 743(b) upon the transfer of a partnership interest can be one of the most challenging issues facing newly-admitted partners and their tax advisors. When a “triggering event” occurs, such as when a partnership interest is transferred by sale or exchange or upon the death of a partner, partnerships may elect to adjust between the value of the outside basis to the new/transferee partner (either purchase price or value of the interest at date of death), and the new partner’s share of the partnership’s adjusted basis in the partnership property.

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 743(b) basis adjustments. Failure to understand the “moving pieces” of the optional basis adjustments under Section 743 can result in unnecessary tax issues for the transferee partners.

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 743(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. Section 754 election and interaction between Sections 754-755
  2. Sect. 743(b) adjustments on transfer of partnership interests
    1. Transactions giving rise to adjustments under Sect. 743(b)
    2. Mandatory basis adjustments under Sect. 743(b)
  3. Computation of Sect. 743(b) adjustments
  4. Allocation of Sect. 743(b) adjustment among partnership assets under Sect. 755
  5. Allocation under Sect. 755 upon taxable sales or exchanges
  6. Allocation under Sect. 755 upon non-recognition transactions
  7. Case sudy and planning considerations

Benefits

The panel will review these and other key issues:

  • Mechanics of making a Section 754 election at partnership level and understanding “inside basis” vs. “outside basis”
  • Purpose of optional basis adjustment under Section 743(b)
  • Rules governing the ability to make a Sction 755 election due to a transfer under 743(b)
  • Calculate and allocate the Section 743(b) optional basis adjustment
  • Practical, detailed examples of partnership transfer scenarios, and analysis of proper decisions in those situations

Faculty

Barnett, Robert
Robert S. Barnett

Partner
Capell Barnett Matalon & Schoenfeld

Mr. Barnett practice encompasses business and tax planning, estate planning and federal and state tax dispute...  |  Read More

Eiseman, Janice
Janice H. Eiseman

Principal
Cummings & Lockwood

Ms. Eiseman focuses her practice on the taxation of closely held businesses and tax planning for owners and investors....  |  Read More

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