Asset from liquidating partnerships
A valid election requires strict adherence to procedural guidelines, including the filing of a written statement with the partnership’s tax return in the year that the distribution or sale occurred.Because the election is made at the entity level, the statement must specify the name and address of the partnership, and it must contain a declaration that the partnership elects under section 754 to apply the provisions of section 734(b) and section 743(b).Ultimately, this can remove the new partner’s rights to immediate depreciation deductions and defer his or her benefit of additional basis until the underlying property is sold.A 754 election bridges the gap between inside and outside basis by immediately stepping-up or stepping-down the basis of the remaining partnership assets.
In addition, when the adjustment relates to depreciable or amortizable property, such as real estate, the new partner may begin taking those deductions in the year the election is made rather than waiting to recoup his or her basis when the property is transferred or sold in the future.
The Auctions and liquidation sales listed below are past projects that were conducted by Liquid Asset Partners.
These projects are sold out and are no longer available.
If Donut breaks even in years 2006 through 2016 and disposes of the property without a Section 754 election on Jan.
1, 2017, Partner D will not recover his outside basis (purchase price in excess of “inside basis”) of 0 until the year of liquidation.