How do I enter Section 754 depreciation and amortization in a 1065 return using worksheet view in CCH Axcess™ Tax and CCH® ProSystem fx® Tax?

Section 754 depreciation and amortization can be entered using the following methods:


Method 1: Detail Depreciation Input - [Return]

  1. Go to the Income/Deductions > [Entity/Activity] worksheet.
    • Select the section for Depreciation and Amortization.
    • Click Detail located in the upper left corner of the grid.
      • Select Section 1 - General.
        • In Line 49 - Ratio ID for Special allocation or 754 - 1065 ONLY, enter a unique ratio ID.
  2. Go to the Special Allocations > Special Allocations worksheet.
    • Select Section 3 - Ratio Allocation.
      • In Line 1 - Ratio ID number, enter the same ratio ID number as entered in Line 49 above.
      • In Line 11 - Ratio Allocation (grid), enter the following:
        • In Partner Number (column), enter the partner number.
        • In Ratio 1 (column), enter the amount or percentage to be allocated.
  3. Calculate the return.


Method 2: Total Depreciation Input - [Return]

  1. Go to the Income/Deductions > [Entity/Activity] worksheet.
    • Select the section for Depreciation and Amortization
    • Click Totals (tab) located at the top of the section next to the section name.
      • Select Section 5 - Tax Adjustment and Preference Items.
        • In Line 4 - Section 754 depreciation - 1065 only, enter amount.
    • Note: Repeat this step for additional business entities / activities.
  2. Go to the Special Allocations > Special Allocations worksheet.
    • Select Section 2 - Special Allocation Detail.
      • In Line 1 - Code Lookup - Federal, use the drop-down to select the applicable code.
        • Code 5207 - 13w: Section 754 depreciation - Trade or Business
        • Code 7609 - 13w: Section 754 depreciation attached to Trade or Business activity
        • Code 7603 - 13w: Section 754 depreciation attached to Rental Real Estate activity
        • Code 7605 - 13w: Section 754 depreciation attached to Other Rental activity
        • Code 7607 - 13w: Section 754 depreciation attached to Portfolio
        • Code 5213 - 13w: Section 754 amortization
      • In Line 4 - Special Allocation Detail grid, enter the following:
        • In Partner Number (column), enter the partner number.
        • In Allocation (column), enter the amount or percent to be allocated.
  3. Calculate the return.


Method 3: Totals Override Input - [Return]

Note: Using this method will override all other 754 depreciation for each income property activity.
  • For Trade or Business activities, do the following:
    1. Go to the Income/Deductions > Business worksheet.
      • Select Section 7 - Deductions.
        • ​In Line 10 - Depreciation - Section 754 - override, enter the total amount for business property.
      • Repeat this step for any additional business entities and activities.
    2. Calculate the return.
 
  • For Rent or Royalty activities, do the following:
    1. Go to Income/Deductions >  Rent and Royalty worksheet.
      • Select Section 3 - Expenses.
        • In Line 14 - Depreciation - Section 754 - override, enter the total for this Rental property.
    2. Calculate the return.
 
  • For Schedule K activities, do the following:
    1. Go to the Income/Deductions > Schedule K - Other Income/Deductions worksheet.
      • Select Section 3 - Schedule K - Other Deductions.
      • Click Detail located in the upper left corner of the grid.
        • In Line 1 - Description, enter the description.
        • In Line 3 - Amount, enter the amount.
        • To allocate the Section 754 amount, do one of the following:
          • To allocate using Partner Numbers, in Line 4 - Partner Number, enter the partner number. Or,
          • To allocate using a Ratio ID number, in Line 5 - Ratio ID, enter a unique ratio ID number.
    2. Go to the Special Allocations > Special Allocations worksheet.
      • Select Section 3 - Ratio Allocation.
        • In Line 1 - Ratio ID number, enter the same ratio ID number as entered in Line 5.
        • In Line 11 - Ratio Allocation grid, enter the following:
          • In Partner Number (column), enter the partner number.
          • In Ratio 1 (column), enter the amount or percentage to be allocated.
    3. Calculate the return.
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