Sec 754 Depreciation Deduction

- R
- Ron Rosenfeld
  
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posted
15 years ago

Mon, Mar 30, 2009 2:54 AM

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

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- lotax
  
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posted
15 years ago

Mon, Mar 30, 2009 9:26 PM

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?

- R
- Ron Rosenfeld
  
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posted
15 years ago

Tue, Mar 31, 2009 4:26 AM

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