Which of the following is false concerning special basis adjustments under Section 754?
A)Special basis adjustments are intended to eliminate discrepancies between inside and outside bases.
B)Special basis adjustments are an annual election made by the partnership.
C)Special basis adjustments can occur when a new investor purchases a partnership interest.
D)Special basis adjustments can occur when a partner recognizes a gain or loss from a distribution.

Question

Quizplus · Accepted Answer

Special basis adjustments are not an annual election made by the partnership; they are mandatory adjustments required by the IRS when certain events occur, such as the purchase of a partnership interest by a new investor, or when a partner recognizes a gain or loss from a distribution.

Which of the Following Is False Concerning Special Basis Adjustments