Sec 754 Depreciation Deduction


R

Ron Rosenfeld

I received a K1 as a limited partner in a partnership that owned and rented
out an apartment building. Last year the building was sold. On the
"Draft" K1, there is an entry in Line 13 (Other Deductions) with a code of
*W and an explanation that this represents Section 754 Depreciation.

I have read that this should be entered on Schedule E along with the
partnership information for this entity.

Is that the case?

If so, do I merely include this amount in the Passive Loss section for this
entity on Schedule E (adding it to the loss shown on Line 2 of the K1), or
is there some other method for handling this?

Thanks.
--ron
 
L

lotax

I received a K1 as a limited partner in a partnership that owned and rented
out an apartment building. �Last year the building was sold. �On the
"Draft" K1, there is an entry in Line 13 (Other Deductions) with a code of
*W and an explanation that this represents Section 754 Depreciation.

I have read that this should be entered on Schedule E along with the
partnership information for this entity.

Is that the case?

If so, do I merely include this amount in the Passive Loss section for this
entity on Schedule E (adding it to the loss shown on Line 2 of the K1), or
is there some other method for handling this?

Thanks.
--ron
Ron, you mentioned so casually that the apartment building was sold
last year that I almost skipped right over that part of your
question. There should be some information - maybe a lot of
information - about the gain or loss on the sale of the building on
your K-1 for last year. There's going to be more than just a Schedule
E entry for the passive income/loss from this property for the year of
sale. Perhaps did the K-1 come with a cover letter that explained
about the sale of the property? Has the general partner been in touch
with you about the sale, how to report it, and where the proceeds are
going?
 
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R

Ron Rosenfeld

Ron, you mentioned so casually that the apartment building was sold
last year that I almost skipped right over that part of your
question. There should be some information - maybe a lot of
information - about the gain or loss on the sale of the building on
your K-1 for last year. There's going to be more than just a Schedule
E entry for the passive income/loss from this property for the year of
sale. Perhaps did the K-1 come with a cover letter that explained
about the sale of the property? Has the general partner been in touch
with you about the sale, how to report it, and where the proceeds are
going?
Yeah, I wasn't asking about the entries having to do with the sale because
I don't have a problem with those entries. I included that information
because I believe the sale is what triggered the 754 depreciation deduction
item.

And my question has to do with where to put that 754 depreciation deduction
item. (That's why I probably came across as casual about the other items).

(FYI, the items having to do with the sale include unrecaptured 1250 gain
and 1231 gain; and my tax program takes care of putting them where they
belong (Sch D and form 4797).)
--ron
 

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