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Section 754 Basis Addjustment to Partnership Assets


joelgilb

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I have a Family Real Estate Partnership where one of the partners died and his 4 kids inherited (via a taxable estate) his interest in the partnership.

The kids have decided to make a Section 754 election to adjust the basis of the assets in the partnership for there % interest. I am trying to figure out how to get ATX to allocate the increased basis only to their shares and how to get ATX to automatically allocate the depreciation in current and future years only to their accounts (both for Income and Loss as well as Capital account).

I believe I can adjust the basis of their interest in the partnership through the "Special Allocations Input Sheet" in the return, by showing the step-up as a contribution of property. But I am pretty sure this will not help with ongoing depreciation, both to their income or their capital accounts.

So for instance if the assets were worth 450,000 before the death of dad, and after 750,000, and he had a 40% share, the step-up will be 750k-450k=300, 300*40%=120K step-up for kids "ONLY". for an asset value of 570K, before current and accumulated depreciation.

I know I could manually allocate, but this would cause a lot of extra work now and in the future. Plus I have to remember to do the allocation each year... malpractice waiting to happen!

So far this has been beyond the ATX support staff, but I am trying to get to the upper level support personnel and or the programming staff.

Actually had a CPA/Atty fried that uses Intuit Proseries, suggest 2 returns, one to trak the kids step-up and one to actually prep for filing. then manually merge attributes each year. WHAT A PAIN! But maybe only answer.

Anyone know how to handle this in ATX?

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I am not sure, but I think I remember that you add a second asset called the "stepped up basis" or something else that will que you in to what it is, and then allocate 100% of the depreciation on that asset to the inheriting shareholder.

Just a thought, but not real sure.

Tom

Lodi, CA

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I am not sure, but I think I remember that you add a second asset called the "stepped up basis" or something else that will que you in to what it is, and then allocate 100% of the depreciation on that asset to the inheriting shareholder.

Just a thought, but not real sure.

Tom

Lodi, CA

That's what I thought that I needed to add an asset that was "Stepped Up Basis", but I don't know how to allocate the tax attributes without doing it manually.

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I looked at your request and could not find an answer without using manual allocations.

The depreciation could be setup as unassigned for the increased depreciation expense computations, however, I could not find a way to automatically allocation this amount to the K-1s.

I have not used the ability to create some type of special worksheet, so I don't know how to do that.

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I looked at your request and could not find an answer without using manual allocations.

The depreciation could be setup as unassigned for the increased depreciation expense computations, however, I could not find a way to automatically allocation this amount to the K-1s.

I have not used the ability to create some type of special worksheet, so I don't know how to do that.

I am afraid even with a special worksheet it will be a manual calculation. And I don't know if I want the depr to be unassigned as when a unit is sold I want to be able to pickup all the unallowed losses.

My guess is I will have to use an excel spreadsheet to keep trak of this from year to year and then manually allocate.

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I like the Alfred Thaddeus Crane Pennyworth pic better than Alfred Joesph Hitchcock pic.

He will be back after the hangins

You could assigned the unasigned at sale time.

That makes sense. Not sure how it helps allocate to the specific partners yet, but it probably will make it easier.

Billing time love that song. You know it?

Yes and love it. Couple of versions out there and I had first heard the attorney version.

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Hostage day 11.

Hair getting gray (what's left of it).

Still no return calls, even though I have called them Each and Every day requesting one.

No one at the first level of tech support even understands what I am asking and all have promised a callback from the development team.

Client ready to take my head off. guess if that happens , the gray hair won't matter!

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We will certainly be interested in learning the solution, once you have it, Joel. Even though I've never had the problem, it's funny how often once you start looking at some esoteric problem, wham, here comes one like it. So if there is a good answer, I want to know about it.

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