K-1 (1065) 754 expense

[grandmabee]

I have a K-1 from 1065. on other deduction they list" sec 754 expense.

I know this is from my partner buying into the partnership with "hot assest" How do I show this on the sch E

a new line with this in ( ) to take the loss against the income. and loss against Se also.

It's box 13 code W

[joelgilb]

The Sec 754 deductions are due to a stepup of the inside basis in the partnership All expenses (usually depreciation) on the stepup are attributed to the new partners and directly effect their income on the k1. THis is deduction you see less often these days, although I have had partnerships I deal with make the 754 election from time to time.

You will need to add a K-1 input on the 1040 and put this on the same line as the other income from the k-1 showing it as a 754 allocation.

[michaelmars]

Actually you can enter it on the same k-1 imput and it flows to sch e properly but it will not be referenced to the k-1 it came from so if you have many k-1's you loose the trail