Under section 754, a partnership may elect to adjust the basis of partnership property when property is distributed or when a partnership interest is transferred. Once an election is made under section 754, it applies both to all distributions and to all transfers made during the tax year and in all subsequent tax years unless the election is revoked.
Box 13, code "W" may represent a variety of deductions and the partnership should provide details regarding the reported amounts. If the amount is a Section 754 adjustment, verify that the amount in Box 13, code "W" has not already been included in your K-1 income (box 1 or 2). If the amount is already included in income, no additional entries are required.
If the amount was not included in your K-1 income, add a separate Schedule K-1 to your TaxAct® return to make the adjustment. The adjustment amount needs to be reported in the same manner as your K-1 income (passive or non-passive and ordinary or rental).
To create the separate Schedule K-1 which will properly report the Section 754 amount from Box 13, code "W:"
The amount will then transfer to the appropriate form and line number based on your particular tax situation.
Visit the IRS FAQs for Internal Revenue Code (IRC) Sec. 754 Election and Revocation webpage for more information.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.