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I am helping a friend with k-1 from partnership that rents…

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I am helping a friend...
I am helping a friend with k-1 from partnership that rents real estate and sells it as well. On this K-1, he has both 1231 gain and 1250 gain and section 754 depreciation.
The 1231 gain is pretty big ($100k). In the footnotes to the K-1, it says: "IRC section 754 basis adjustment available to offset section 1231 gain reported on your k-1. The amount to the right is $177,884. This amount doesn't appear anywhere else on the k-1.
I know that I should report 1231 gain on form 4797 and 1250 gain on line 19. My question is - can I really offset the 1231 gain (together with the 1250 gain) against this basis of $177,884? What does this basis actually represent? If so, can I just net out the entire gain (since basis is higher) so I report $0 1231 gain (and $0 1250 gain)?
Submitted: 2 years ago.Category: Tax
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Answered in 5 hours by:
1/21/2016
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 2 years ago
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,032
Experience: 35 years tax experience, including four years at a Big 4 firm.
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Hi from just answer. I'm PDtax.

I propose that you accept an offer of additional service fit a price increase. It also sets up a private link we can use to communicate. I would ask to see a copy of the k-1 to advise.

Accept, and we can work on this later this morning.

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