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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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I am helping a friend with k-1 from partnership that rents

Customer Question

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: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

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.