When do I file the 754 Election form?

[Tom8]

My brother died in 2018. I am preparing a K-1 for him for 3 months and for his estate for 9 months of 2018 rental income. His estate will close and his share in the family real estate partnership will be transferred to his daughters in 2019. Do I file the 754 Election form with the 2019 1065 tax return?

[ScruffyCurmudgeon]

Regs. Sec. 1.754-1(b)(1)  [26 CFR § 1.754-1 https://www.law.cornell.edu/cfr/text/26/1.754-1] provides that an election under Sec. 754 to adjust the basis of partnership property under Secs. 734(b) and 743(b) shall be made in a written statement filed with the partnership return for the tax year during which the distribution or transfer occurs. For the election to be valid, the return must be filed no later than the time prescribed for filing the return (including extensions) for the tax year. Further, a valid Sec. 754 election must (1) set forth the name and address of the partnership making the election, (2) be signed by any one of the partners, and (3) contain a declaration that the partnership elects under Sec. 754 to apply the provisions of Secs. 734(b) and 743(b).

IRS Publication 4163, Modernized e-File (MeF) Information for Authorized IRS e-fileProviders for Business Returns (rev. December 2014), which provides guidance to taxpayers on including forms and elections that require signatures when e-filing a tax return, indicates that, where a taxpayer is making an election that requires a signature, a signed election may be attached to the e-filed return in a PDF. It is worth noting that IRS Counsel reviewed regulations to identify forms and elections that require a separate signature to determine whether the signature requirements could be changed. T.D. 9300 and T.D. 9329 contain amendments to the income tax regulations and the procedure and administration regulations. While these regulations eliminate certain third-party signature requirements considered to have been impediments to the electronic submission of tax returns and other forms, no changes appear to have been made to the Sec. 754 election requirements, including the requirement that the election contain a partner's signature.