What is a Section 754 election?

A Section 754 election is a Partnership tax election that lets the entity adjust the basis of Partnership property after certain interest transfers or property distributions. The election is filed with Form 1065 and generally stays in effect for later years unless revoked. It supports Section 743(b) partner-specific adjustments and Section 734(b) distribution adjustments, helping tax teams preserve basis, depreciation, gain, and loss reporting across future returns. Partnerships help advisors link transfer documents, asset values, basis schedules, and return disclosures before hard deadlines.