Question

Section 754 Depreciation Reporting on K-1 fro 2023 tax Return

Forum|Forum|2 years ago
March 22, 2024
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I am using 2023 Turbotax Premier. I have a problem and it relates to reporting K-1 figures on my 2023 personal tax return. The 2022 version of Turbo Tax Premier was setup with a specific code for depreciation under line (box) 13. The K-1 reported code within turbotax contained a specific code for the depreciation identified as "W for Section 754 depreciation" which automatically subtracted the amount from the income. But the 2023 Turbotax version uses the code ZZ ......which is "other" which does not subtract the depreciation for the income. I need assistance in accounting for the depreciation. How do I adjust in TT so that the depreciation is properly subtracted when computing my share of partnership income?

Ed H.

M

Mike9241

is there an equal amount on line 13V which refers to IRC 743? that should be the old 754 adjustment now retitled as 743(b) adjustment.

Sections 743 and 754 of the Internal Revenue Code (IRC) are interconnected.

Before changes made by the TCJA, “used” assets were not eligible for bonus depreciation. But, for assets acquired and placed into service after 9/27/17, bonus depreciation will be allowed for outright purchases of previously-used assets. The Service has now clarified as to how this change would apply to the acquisition of an interest in an existing partnership holding previously-used assets, to the distribution of such assets from an existing partnership, or to similar transactions. As a result, bonus depreciation is now allowed on used assets held by the partnership where the Sec. 754 adjustment is made pursuant to Code §743 (i.e., purchases or inheritances of a partnership interest) as opposed to Code §734 (i.e., where the step- up is due to “disappearing basis” or gain resulting from a liquidating distribution of property to an exiting partner).