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Section 754 Step-Up in Basis: Understanding the Tax Issues for Partnerships and LLCs (S754)

Friday, November 15, 2024
10:00 AM - 12:00 PM (Eastern)

Mike Tucker, Ph.D., LL.M., J.D., CPA

Bob Lickwar, CPA

  • Format Webinar
  • Credits 2.00
  • Level Intermediate
  • Field of Study Taxes (2)

$99.00


Overview

When a purchaser buys an existing partner’s partnership interest or the interest of a member of a limited liability corporation (LLC) taxed as a partnership, the amount paid becomes the basis for the purchaser’s partnership interest (outside basis). If the partnership’s assets have appreciated sufficiently, the difference between the new partner’s inside and outside basis can be substantial. This disparity can deprive the new partner of depreciation deductions and inflate his or her share of the gain from subsequent property dispositions unless a Section 754 election is in effect. The Section 754 election can also apply when a partnership makes a distribution of property and the basis of the distributed property to the partnership and the basis the partner/distributee will take in the distributed property are not equal. In this case, a partnership can recover basis it would otherwise lose if the 754 election were not in effect.

Major Topics:

  • How and why a partnership makes a 754 election
  • The effect of the 754 election when an interest in a partnership is sold or inherited
  • How the 754 election applies when a partnership makes a distribution of property to one or more of its partners
  • How to make the 754 basis adjustment

Learning Objectives

  • Determine the amount of a Section 754 basis step-up
  • Know how to allocate the basis step-up to the partnership's assets
  • Know how a partnership makes a Section 754 election and reports it to the IRS

Who should take this course:

Any Accounting and Finance Professional who wishes to understand the tax rules and economic opportunities associated with having a partnership make a Section 754 election

A basic understanding of the tax rules impacting individuals and pass-through entities

None

Yes

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