A § 754 Election Is Made for a Tax Year

question 25

True/False

A § 754 election is made for a tax year in which the partner recognizes gain or loss on a distribution from the partnership or the distributee partner's basis in distributed property is increased or decreased from the inside basis the partnership held in those assets. The election is made by the partnership each year in which it is necessary to adjust a partner's share of the inside basis of partnership assets. In a year in which an unfavorable result would arise, the partnership can forego making the election.

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Definitions:

General Manager

An executive responsible for overseeing the daily operations and business activities within a specific area or department of a company.

Significant Influence

The power to participate in the financial and operating policy decisions of a business but is not control over those policies.

Financial Decisions

Decisions made by individuals or organizations related to the allocation of resources, investment, budgeting, and managing finances.

Operating Policy

A set of guidelines or principles that dictate the operational decisions and day-to-day functioning of an organization.