Understand the benefits and detriments of a Section 754 Election and why a Partnership may want to revoke the election.
Section 754 elections by partnerships are usually beneficial to its partners in that it equalizes inside and outside basis and prevents premature recognition of gain by new partners. Once the partnership makes the election, it applies to all subsequent years. However, it is possible that the Section 754 election may be counterproductive and result in the elimination of losses or creates an administrative burden to the partners. The removal of the technical termination provisions eliminated an effective way to revoke the elections without the consent of the Internal Revenue Service. To streamline applications for revocation of Section 754 elections, the IRS has developed procedures and issued a new Form (Form 15254). The Form requires a statement of reasonable cause for revocation of the election. This course will discuss the benefits and detriments of a Section 754 Election and the reasons why a Partnership may want to revoke the election. It will provide instructions for completing Form 15254 and how to plan for acceptance or denial.
Learning Objectives
- You will be able to differentiate between a Positive adjustment and a negative adjustment
- You will be able to recognize the characteristics of the Substantial Built-in Loss Rule
- You will be able to identify the Technical Termination requirements
- You will be able to identify the requirements for Form 15254
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Agenda
Basics of Section 754 Election
Why Make a Section 754 Election
- Equalizes Inside and Outside Income Tax Basis
- Avoids Premature Recognition of Gain From Sale of Partnership Assets
Elements of a Section 754 Election
- Applies to All Subsequent Periods
- Results in Increase or Decrease in Inside Tax Basis
Substantial Built-In Loss Rule
- Prevents Double Benefit of Built-in Losses
- Mandatory Step Down
- New Rules for Transfers After 12/31/17
Section 754 and Distributions of Property (Section 734(b)
Termination of Partnerships Pre-2018
- Ceases Activity
- Technical Termination
- Ability to Make New Elections
- Challenges and Opportunities of Technical Terminations
Terminations After 12/31/17
- No Longer Technical Terminations
- No Longer Able to Terminate Elections
Revoking the Section 754 Election After 2017
- New Form - 15254
- Examples of Reasons to Revoke Elections
- Planning for Acceptance
- Other Considerations
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Why Lorman?
Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Credits
OnDemand Course
This course was last reviewed on May 29, 2024.
Call 1-866-352-9540 for further credit information.
- AIPB 2.0
- This program is acceptable for 2.0 CPEC(s) towards the CB designation through the American Institute of Professional Bookkeepers (AIPB).
CPE/NASBA - QAS Self Study 2.8 including Taxes 2.8
- Noggin Guru, Inc. dba Lorman Education Services and BankersHub is registered with the National Association of State Boards of Accountancy (NASBA) as a QAS Self Study sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org. For more information regarding administrative policies such as complaint and refund, please contact our offices at 866-352-9539. CPE Credit: Maximum Credit Hours: 2.8 each session (based on a 50 minute credit hour). You must attend at least 50 minutes to obtain credit. Field of Study: Taxes for 2.8 hours. Prerequisite: . Level of Knowledge: Intermediate. Teaching Method: Seminar/Lecture. Advance Preparation: None. Delivery Method: QAS Self Study. Please refer to the information in this advertisement for outline, course content and objectives. Upon completion of this course, you will receive a certificate of attendance. Final approval of a course for CPE credit belongs with each state's regulatory board.
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Why Lorman?
Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Faculty
Robert E. Demmett, CPA, MS
Withum Smith+Brown, PC
- Partner in WithumSmith+Brown, PC’s New York office, and has over 30 years of experi-ence
- Certified public accountant in New York
- Specializes in tax and financial planning for high-net-worth individuals, as well as han-dling tax and compliance issues for partnerships, corporations, and other entities; in ad-dition, he helps clients with structure issues, as well as acquisitions and dispositions of businesses and real estate
- Honored by The New York Enterprise Report as one of the recipients of its inaugural “Best Accountants and Attorneys for Growing Businesses Awards,” June 2010
- Lectures for the Foundation of Accounting Education and was an adjunct professor at Queens College Graduate School of the City University of New York
- Can be contacted at [email protected] or 212-829-3210
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Why Lorman?
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