Revoking a Section 754 Election: New Form 15254, Tips for Avoiding Denial, Sufficient Reasons for Request

Note: CLE credit is not offered on this program

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


Conducted on Thursday, September 9, 2021

Recorded event now available

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Course Materials

This course will explain how and when to revoke a Section 754 election. Our panel of partnership experts will discuss the steps required to request a revocation, including completing new Form 15254 and how to increase the probability that a request is granted.

Description

A Section 754 election allows a partnership to step up the basis of its assets as outlined in Sections 734(b) and 743(b). Once made, the election is binding on all future transfers of partnership interests, sometimes requiring a step-down of partnership assets.

Before the Tax Act of 2017, a technical termination occurred when a sale or exchange of 50 percent or more of the capital or profits interest in a partnership within a 12-month period occurred. Since the repeal of IRC Section 708(b)(1)(B), there has been a significant increase in the number of applications for revocation of Section 754 elections. To handle the demand, the IRS released new Form 15254, Request for Section 754 Revocation.

A partnership must prepare and submit Form 15254 to the applicable IRS district director with reasonable cause for revocation. The instructions specifically state that "no application for revocation of a section 754 election shall be approved when the purpose of the revocation is primarily to avoid stepping down the basis of partnership assets upon a transfer or distribution. See Regulations section 1.754-1(c)." Tax professionals working with partnerships need to understand how to complete and submit new Form 15254 to increase the chances that the application for revocation will be accepted.

Listen as our panel of pass-through experts explains sufficient reasons for revocation, tips for increasing chances of acceptance, and when and how to prepare and submit the application for revocation.

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Outline

  1. Background
  2. Making a Section 754 election
  3. Acceptable reasons for revocation
  4. Preparing Form 15254, Request for Section 754 Revocation
    1. Part I Information for All Requests
    2. Part II Reason for the Request
    3. Supporting documentation
  5. Other considerations

Benefits

The panel will review these and other critical issues:

  • Tips to avoid denial of the application for revocation of a Section 754 election
  • Reasons the IRS considers sufficient for revoking a Section 754 election
  • How to properly prepare and submit new Form 15254, Request for Section 754 Revocation
  • When is the revocation application submitted relative to a partnership's tax year?

Faculty

Demmett, Robert
Robert E. Demmett, CPA, MS

Partner
Withum Smith+Brown

Mr. Demmett is a certified public accountant in New York. He specializes in tax and financial planning for...  |  Read More

Tannenbaum, Faye
Faye Tannenbaum, CPA

Partner
Mazars USA

Ms. Tannenbaum has over 28 years of experience providing tax compliance and consulting services to some of the largest...  |  Read More

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