BASIS ADJUSTMENT UNDER SECTION 754 Clause Samples
The "Basis Adjustment Under Section 754" clause allows a partnership to adjust the tax basis of its assets when there is a transfer of a partnership interest or a distribution of property. In practice, this means that when a partner sells their interest or receives a distribution, the partnership can elect to increase or decrease the basis of its assets to reflect the new partner's purchase price or the distributed property's value. This adjustment ensures that tax attributes are properly aligned with the economic realities of the transaction, preventing double taxation or tax benefits from being duplicated, and thereby maintaining fairness and accuracy in the allocation of income, deductions, and gains among partners.
BASIS ADJUSTMENT UNDER SECTION 754. To the extent an adjustment to the adjusted tax basis of any Partnership assets pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain, if the adjustment increases the basis of the asset, or loss, if the adjustment decreases such basis, and such gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations.
BASIS ADJUSTMENT UNDER SECTION 754. To the extent an adjustment to the adjusted tax basis of any Company assets pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain, if the adjustment increases the basis of the asset, or loss, if the adjustment decreases such basis, and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations.