754 Adjustments June 2016

PARTNERSHIPTAX

SECTION 754ADJUSTMENTS

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What is a 754adjustment?


I n t h i s s e c t i o n w e w i l l c o v e r :

What is a 754adjustment?Where can it beused?



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Takes approx 5 1/2 minutes.



754 IS ANELECTION

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INSIDEBASIS


OUTSIDEBASIS


OUTSIDE BASIS


WHAT THEPARTNER

PAYS


INSIDE BASIS


THE PARTNER'S

SHARE


WHY?



EXAMPLE


OLD PARTNERSELLS 10%

TO NEW PARTNER


COMPANYNBV =

$1,000,000facebook.com/uraccounted4accounting/


PURCHASEPRICE

$200,000facebook.com/uraccounted4accounting/


NBVIS NOTFMV



WHO CARES?



NEW PARTNER




FLOW -

THRU



=

$1,000,000 GAIN

$2,000,000-1,000,000



$100,000 GAIN

NEW PARTNER K-1



GAINSHOULD BE

$0



SOLUTION?

SECT 754



$100,000ASSETFOR

NEW PARTNER



OFFBALANCESHEET

(IN THIS EXAMPLE)



$0 GAIN

NEW PARTNER K-1



DEPRECIATIONIS

POSSIBLE



AMORTIZATIONIS

POSSIBLE



OTHERWISEBASISONLY


R e c a p o f w h a t w e c o v e r e d :


754 allowsbalancing


R e c a p o f w h a t w e c o v e r e d :

754 allowsbalancing


New partner getsstep up


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754 Adjustments June 2016

Education

Transcript of 754 Adjustments June 2016