Section 754 Elections Overview
A Section 754 election applies for later years, unless revoked. Accordingly, partnerships filed a timely return containing an otherwise valid section 754 election statement. In order to ease the burden on partnerships seeking to make a valid section 754 election, the Treasury Department and the IRS are proposing to amend the current regulation to remove the signature requirement.
Understanding the Difference: 754 vs. 743
What is the difference between 754 and 743? 743(b) provides that in the case of a sale or exchange of a partnership interest for which a Sec. 754 election is in place, a partnership shall adjust the basis of partnership property. 754, relating to the optional adjustment to the basis of partnership property.
Considerations for Section 754 Elections
A Section 754 election can be a favorable tax efficiency tool that is unique to partnerships (as compared to corporations). However, the complexity, administrative burden, and changing economic environment should always be carefully considered.
Additional Information
Section 754 of the Internal Revenue Code allows for depreciation to be used as a tax deduction, with limits. How do you report this on your taxes and what is the difference between Section 179 and Section 754? Section 754 depreciation is a type of adjustment that can be applied to income or capital gains. The “section 754 depreciation adjustment on k-1” is the process for calculating this adjustment.