Inputs which flow to 1065 Schedule B

To input Optional Basis adjustments:

1. Go to General > Basic Data worksheet.
2. Expand Section 3 - Other Information.
3. Navigate to Grid 17.
4. In Column Optional Basis Amount, input applicable amount.
   • Positive 743(b) numbers appear on Schedule B line 10b.
   • Negative 743(b) numbers appear on Schedule B line 10b.
5. Calculate the return.

To input Substantial Basis adjustments:

1. Go to General > Basic Data worksheet.
2. Expand Section 3 - Other Information.
3. Navigate to Grid 19.
4. In Column Amount, input applicable amount.
   • Positive 743(b) numbers appear on Schedule B line 10c.
   • Negative 743(b) numbers appear on Schedule B line 10c.
5. Calculate the return.

Inputs which flow to Form 1065 Schedule K and partner K-1s

Method 1: Asset Detail

1. Go to Income / Deductions worksheet.
2. Select applicable Business / Rent and Royalty.
3. Expand Section Depreciation and Amortization.
4. Select Detail.
5. In Line 46 - Ratio ID, input a unique number.
6. Go to Special Allocations > Special Allocations worksheet.
7. Expand Section 3 - Ratio Allocation.
8. In Column Ratio ID Number, input the unique number assigned to the 743(b) depreciable asset.
9. In Column Depr/Amort Code, select from the F4 Lookup Value option 4 - Section 743(b) Dpr. / Amort.
10. Calculate the return.

Method 2: Total Override

1. Go to Income / Deductions - Schedule K Overrides.
2. Expand Section 1 - Schedule K Income Overrides.
3. In Line 29 - Section 743(b) positive adjustments, input applicable amount.
4. Expand Section 2 - Schedule K Deductions Overrides.
5. In Line 23 - Section 743(b) negative adjustments, input applicable amount.
6. Calculate the return.

Note:

• There is a difference between 743(b) and 734(b) adjustments in their presentation in the software.
• If the asset is entered on Asset Detail, then the statement "Other Information, Box 20, Code AH Section 743(b) Basis Adjustment" will be created on Sch K-1, Line 20AH.
  • Schedule K-1, Line 20AH statement will be suppressed if any of the following inputs are made:
    1. Method 2, step 5 above suppresses for all partners.
    2. Partners > General Options worksheet > Section 1 > Line 18 - Suppress the Schedule K-1 Section 743(b) basis adjustment statement for box 20, code AH, this checkbox also suppresses for all partners.
    3. Partners > Schedule K-1 Overrides worksheet > Detail > Section 11 - Other Deductions > Line 12 - L13V Section 743(b) negative adjustments, this input suppresses the statement for specific partners.
• In the 2020 Partnership system, Section 754 and 743 deductions are included in calculating Schedule K-1, Item L, Current Year Net Income (Loss) by default. To change this default, please see the article in the Additional Information section below.