Section 743(b) Adjustments

Section 743(b) Adjustments - ordinary income property STEP...

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TAX 6317 BASIS ADJUSTMENTS UNDER SECTION 743(b) STEP 1. Calculate Total Adjustment: Income reportable by transferee (including Sec. Sec. 1.704-3(d) remedial allocations) if all assets were hypothetically sold immediately after the transaction. STEP 2. Calculate Adjustment Allocable To Classes Of Property: A. Ordinary Income Property: All items of ordinary income or loss plus (if applicable) decreases due to the excess negative adjustments to capital gain property. B. Capital Gain Property: Total Sec. 743(b) adjustment minus ordinary income adjustment NOTE: Basis adjustments cannot exceed the partnership’s basis in capital gain property – any such excess is allocated to
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Unformatted text preview: ordinary income property. STEP 3. Allocate Adjustment To Each Asset Within Classes: A. Ordinary Income Property: Income/loss recognized in hypothetical sale less (if applicable): Negative basis adjustment FMV of Ordinary Asset from capital gain property X FMV of all Ordinary Assets A. Capital Gain Property: Income/loss recognized in hypothetical sale less (if applicable): Increase or decrease in FMV of Capital Asset basis of capital gain property X FMV of all Capital Assets NOTE: Special rules of Proposed Regulation 1.755-2 apply in the case of unstated goodwill. EXCEPTIONS: Not applicable to income in respect of a decedent....
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