Section 754, In General . The crux of Section 754 is the marrying of two concepts that often befuddle tax advisors: “inside” and “outside” tax basis.

Outside basis, or book basis, tracks each partner's capital account based on generally accepted accounting principles. Inside basis, or tax basis, ...

And in that case the outside basis would be high and the inside basis would be low due to the fact the assets appreciated. That's the purpose of the 754 election. But inside/outside basis can diverge.

Create inside/outside basis disparities through various methods, ... The IRS has been adding more tax experts from outside the agency to help spot tax avoidance strategies.

The new guidance aims to stop the use of basis-shifting transactions that use related-party partnerships to avoid taxes. In these complex maneuvers, high-income taxpayers and corporations strip basis ...

On Jan. 14, 2025, the Treasury Department issued final regulations designating certain related-party partnership basis shifting transactions as “transactions of interest.” Although this ...

For tax year 2018, any partnerships where GAAP, 704(b) or Other is checked in Item L of the Schedule K-1, or any partnership return where tax capital basis is checked (but the tax capital basis was ...