Discussion Question $22-7($LO$.10)$

Answer the following questions regarding the optional adjustment$-$to$-$basis election $(754$ election$).$

a$.$ Who makes the optional adjustment$-$to$-$basis election?

The partnership $q,$

b$.$ Regarding how the election is made, select "Yes" for those that apply, otherwise select $"$No$".$

By attaching a statement to the tax return for the taxable year in which the step$-$ up transaction occurs.

By requesting a Letter Ruling prior to the end of the taxable year in which the step$-$up transaction occurs.

By checking the appropriate box on Schedule K and the corresponding Form $K-1.q,$

c$.$ Regarding future years and the $754$ election, select "Yes" for those that apply, otherwise select $"$No$".$

All transactions in the year of the election are subject to the election. $$

All future transactions are subject to the election.

In any future year, the partnership can revoke the election without

$$ the permission of the IRS by attaching a statement to the tax return.

d$.$ In what situations might the partnership not make the election?

A partnership generally $$ make the election related to a transaction in which a step$-$down would be needed.