2578955
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

I went from a SMLLC to partnership mid-year and filed 8832. I gifted half the business and went from 100% to 50%. Do I need to also make a section 754 election on the return?

 
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
AliciaP1
Expert Alumni

I went from a SMLLC to partnership mid-year and filed 8832. I gifted half the business and went from 100% to 50%. Do I need to also make a section 754 election on the return?

@abholcomb My apologies - I read right over that and therefore misspoke.

 

You do NOT need to claim the 754 election in this situation. You can establish basis in a new partnership by whatever means the partners agree to. 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

4 Replies
AliciaP1
Expert Alumni

I went from a SMLLC to partnership mid-year and filed 8832. I gifted half the business and went from 100% to 50%. Do I need to also make a section 754 election on the return?

Yes, you do need to make the 754 election since you transferred ownership interest.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

I went from a SMLLC to partnership mid-year and filed 8832. I gifted half the business and went from 100% to 50%. Do I need to also make a section 754 election on the return?

Hi Alicia,

 

Here's the point of  my confusion. The IRS FAQs for section 754 states "An IRC Section 754 election allows a partnership to adjust the basis of the property within a partnership under IRC Sections 734(b) and 743(b) when one of two triggering events occur: 1) a distribution of partnership property or 2) certain transfers of a partnership interest. These adjustments can only be made if the partnership has made an election under IRC Section 754.". My single member LLC became a partnership mid-year and the basis was adjusted in the transition from SMLLC to partnership. The basis was not adjusted within the partnership. Once the partnership was established (via the gift), there was no adjustment in the basis from that point forward. That's why I figured no need for a Section 754 election.

AliciaP1
Expert Alumni

I went from a SMLLC to partnership mid-year and filed 8832. I gifted half the business and went from 100% to 50%. Do I need to also make a section 754 election on the return?

@abholcomb My apologies - I read right over that and therefore misspoke.

 

You do NOT need to claim the 754 election in this situation. You can establish basis in a new partnership by whatever means the partners agree to. 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

I went from a SMLLC to partnership mid-year and filed 8832. I gifted half the business and went from 100% to 50%. Do I need to also make a section 754 election on the return?

Thanks Alicia,

That's how I read it but I wanted confirmation from someone who speaks IRS language 🙂

Unlock tailored help options in your account.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question