How do I input Section 743(b) Adjustments in a 1065 return using worksheet view in CCH® ProSystem fx® Tax and CCH Axcess™ Tax?

  • Article Type:
  • How To
  • Last Modified:
  • 02/14/2022

Objectives

Understand the inputs of 743(b) adjustments and where they appear in a partnership return.

Environment

  • CCH Axcess
  • CCH Axcess Tax
  • CCH ProSystem fx Tax
  • 1065
  • Worksheet

Procedure

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.
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