Question

I have a 743 (B) capital basis adjustment on my K1...how do I enter that into turbotax personal

Forum|Forum|6 years ago
June 6, 2019
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Inside/outside basis for the 743(b) election is accounted for by the partnership and reflected in the amounts and codes on your schedule K-1. All you need to do is enter your schedule K-1, exactly as reported to you and the software will ask any necessary questions.

Let us know how it goes and if you have any questions specific questions while entering the form.

I

I_dont_understand_my_k1

Hi k-1/1040 experts. I sure do still have box 20 code U 743b adjustment questions.

My K-1's always come with an entry in box 20 code U that says STMT and my understanding is that the requirement for the additional information it's referencing is this, according to the instructions for people that prepare k-1s:

For each partner, the total Sec. 743(b) adjustment net of any cost recovery as a single amount for all asset categories; and a statement showing the amount of each remaining Sec. 743(b) basis adjustment, net of cost recovery by asset category.

The corresponding footnote in the K-1 is always a table that for several asset categories (in this case, "buildings" and "land") lists three columns:

SECTION 743(B) ORIGINAL BASIS

SECTION 743(B) ACCUMULATED DEPRECIATION/AMORTIZATION

SECTION 743(B) REMAINING BASIS

The third column is, of course, what you get when you subtract the second from the first.

I feel like turbotax wants me to enter a single number for Box 20 line U and I think that single number is "the total Sec. 743(b) adjustment net of any cost recovery as a single amount for all asset categories" and I further believe that the partnership thinks I know how to generate that from the little table, but the partnership is wrong about that; I have no idea.

I've been ignoring this for years because I assume this basis adjustment only matters when the limited partnership is somehow disposed of or has some other kind of event. But maybe I am wrong about that?

So my questions are whether any number entered for box 20 code U actually affects the form 1040, and if so, how am I supposed to generate it from the little table the partnership provides?

Thanks!

Rick19744

You should have inquired about this at the beginning of this investment:

If you have not accounted for this on prior year returns, then you may want to consider amending your tax returns.
The actual Section 743(b) adjustment should be reflected on your K-1 in Part III box 13 Code V.
This amount should be netted with the amount in either box 1 or 2 of your K-1.
The information in box 20 is just an overall picture of your Section 743(b) adjustment. It reflects the total amount of the adjustment (original basis), the cumulative amount allocated to you (accumulated depreciation / amortization), and then the remaining adjustment that will be allocated in future years until you either sell the investment or the adjustment period is complete.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.