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File Form 15254 to request a section 754 revocation. Current revision. Form 15254 and instructions PDF. Recent developments. None at this time. Other items you may find useful. Tax information for partnerships. Questions and answers about section 754 election and revocation. Other current products

31, 2013. The year the section 754 election was made is 2013 or December 31, 2013. Revocation Tax Year Begins The revocation tax year begins on the first day of the tax year the partnership requests the revocation of its section 754 election to take effect. Example. A calendar year taxpayer filed a section 754 election for the tax year ending ...

The Section 754 election enables adjustments to the tax basis of partnership property, affecting both the inside and outside basis. Inside Basis. The inside basis refers to the partnership’s basis in its assets. Under IRC Section 743(b), a Section 754 election allows adjustments to the inside basis when a partnership interest is transferred.

Editor: Greg A. Fairbanks, J.D., LL.M. In September 2020, the IRS released a draft of a new form, Form 15254, Request for Section 754 Revocation, that a partnership would use to request a revocation of a Sec. 754 election.The IRS explained that the form has been developed due to an increase in Sec. 754 election revocation applications since the technical termination of a partnership under ...

A Section 754 election is difficult to revoke, tends to increase the partnership’s administrative burdens, and applies on a mandatory basis to both distributions of partnership assets and transfers of partnership interests, the partnership (and partners) should thoroughly analyze the situation before making the election.

Revocation or Termination Procedures. Although a 754 election can provide tax benefits, partnerships must understand the procedures for revoking or terminating the election. Once made, the election is generally binding for all subsequent tax years unless the IRS grants consent for revocation.

The partnership and the partners use the calendar year as the taxable year. A sells his interest in the partnership to D on January 1, 1971. The partnership may elect under section 754 and this section to adjust the basis of partnership property under sections 734(b) and 743(b).

If the partnership fails to make the election, it can file for late relief under Treasury Regulation Section 301.9100-2, which is an automatic 12-month extension for IRC Section 754 elections.

The basis of partnership property shall not be adjusted as the result of a transfer of an interest in a partnership by sale or exchange or on the death of a partner unless the election provided by section 754 (relating to optional adjustment to basis of partnership property) is in effect with respect to such partnership or unless the partnership has a substantial built-in loss immediately ...

By John G. Hodnette and Savannah Rankich A partnership may elect to adjust its inside basis under Sections 734(b) and 743(b) by making a Section 754 election with the partnership’s annual tax return. The basis adjustment occurs, however, only when there is (1) a distribution of partnership property or (2) a transfer of partnership interest. 754 elections

This IRM incorporates IG Memo LBI-04-0621-0004, Guidance on the Revocation of Internal Revenue Code Section 754 Election Procedures. Audience LB&I, SB/SE, and IRS Independent Office of Appeals (Appeals) employees. Effective Date (07-27-2023) ... the SFTS and the cadre attorney will start the review of the IRC section 754 revocation request.

The final regulations removed the signature requirement. Thus, under Treas. Reg. Section 1.754-1(b), the requirements for making an IRC Section 754 election are (1) a written statement, (2) filed with the partnership return for the tax year during which the distribution or transfer occurs, (3) within the correct filing period (with extensions).

To handle the demand, the IRS released new Form 15254, Request for Section 754 Revocation. A partnership must prepare and submit Form 15254 to the applicable IRS district director with reasonable cause for revocation. The instructions specifically state that "no application for revocation of a section 754 election shall be approved when the ...

The section 754 election of the Internal Revenue Code allows partnerships to make ... has not needed to apply—the 754 election revocation regulation. The repeal of technical ... the IRS posted in the Federal Register seeking comments on a new form, Form 15254, with which partnerships would submit 754 election revocation requests. Proposed

Because a Sec. 754 revocation is granted after the fact, if the revocation is denied, there is no opportunity to correct the problem. In the case of Space City Partners, if the new partners form a partnership (that does not make a Sec. 754 election), the new partnership could acquire a 33% partnership interest in Space City Partners by a ...

Section 1.754-1(c)(1) provides the general rule that a partnership having an election in effect under § 754 may revoke that election only with the approval of the director for the internal revenue district in which the partnership return is required to be filed. Section 1.754-1(c)(2) provides that notwithstanding § 1.754-1(c)(1), any

Understanding Section 754 Elections. A Section 754 election allows a partnership to implement an increase, also known as a "step-up" in the basis of partnership assets. This election serves to align the partner's basis in their stake in the partnership (outside basis) with the partnership's asset basis (inside basis) for tax considerations.

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 ...

Overview and Purpose Section 754 of the Internal Revenue Code allows partnerships to adjust the basis of partnership property when there is a transfer of partnership interests or a substantial change in partnership ownership. ... The Section 754 election must be made by the partnership on its tax return for the year in which the event ...