754 adjustments june 2016
TRANSCRIPT
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PARTNERSHIPTAX
SECTION 754ADJUSTMENTS
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I n t h i s s e c t i o n w e w i l l c o v e r :uraccounted4accounting.com
What is a 754adjustment?
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I n t h i s s e c t i o n w e w i l l c o v e r :
What is a 754adjustment?Where can it beused?
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https://www.youtube.com/watch?v=Ez2vWfqLJqw
Click here for the narratedversion of this deck on
Takes approx 5 1/2 minutes.
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754 IS ANELECTION
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INSIDEBASIS
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OUTSIDEBASIS
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OUTSIDE BASIS
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WHAT THEPARTNER
PAYS
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INSIDE BASIS
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THE PARTNER'S
SHARE
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EXAMPLE
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OLD PARTNERSELLS 10%
TO NEW PARTNER
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COMPANYNBV =
$1,000,000facebook.com/uraccounted4accounting/
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PURCHASEPRICE
$200,000facebook.com/uraccounted4accounting/
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=
$1,000,000 GAIN
$2,000,000-1,000,000
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$100,000 GAIN
NEW PARTNER K-1
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GAINSHOULD BE
$0
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SOLUTION?
SECT 754
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$100,000ASSETFOR
NEW PARTNER
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OFFBALANCESHEET
(IN THIS EXAMPLE)
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$0 GAIN
NEW PARTNER K-1
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DEPRECIATIONIS
POSSIBLE
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AMORTIZATIONIS
POSSIBLE
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OTHERWISEBASISONLY
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R e c a p o f w h a t w e c o v e r e d :
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754 allowsbalancing
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R e c a p o f w h a t w e c o v e r e d :
754 allowsbalancing
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New partner getsstep up
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