This article examines the issues (good and bad) related to making an affirmative Code section 754 election to adjust the basis of assets held inside a partnership when a partnership interest is included in a decedent’s estate. The mechanics of making the election are set out. It also considers when the Code requires basis adjustment of partnership assets without an election and whether an adjustment is permitted when the partnership interest is held in a QTIP trust that is part of a surviving spouse’s estate. Finally, it considers when an estate might assert an estate tax inclusion under 2036 to obtain a basis adjustment when no estate tax is due.
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F. Ladson Boyle is the Charles E. Simon, Jr., Distinguished Professor Emeritus of Federal Law at the University of South Carolina, a former Adjunct Professor of Law at the University of Alabama’s LL.M. in Tax program, and a former Adjunct Professor of Law at the University of Miami’s LL.M. in Estate Planning. Professor Boyle has taught courses in income taxation of trusts and estates, wills, trusts and estates, partnership tax, estate planning, corporate tax, income tax, and criminal law. He has served as a faculty advisor to the ABA’s Real Property, Probate, and Trust Journal. He is also the co-author (with Jonathan G. Blattmachr) of BLATTMACHR ON INCOME TAXATION OF ESTATES AND TRUSTS (PLI, 17th Edition, 2023) and the co-editor of the PROBATE PRACTICE REPORTER (with Professors Sam Donaldson and Alan Medlin). Professor Boyle received his B.S. degree from the College of Charleston in 1969, his J.D. degree from the University of South Carolina School of Law in 1974, and his LL.M. degree in Taxation from New York University in 1975. Mr. Boyle is an academic fellow of the American College of Trust and Estate Counsel.
Ryan Wallace is an attorney at Sojourner, Caughman, and Thomas, LLC. where he advises fiduciaries and beneficiaries on matters involving estate and trust administration. In that regard, he guides clients through the maze of postmortem planning and compliance issues that come about during wealth transfer, focusing on tax-efficient management and distribution of estate and trust assets. With a background in professional services, he has experience working with generational transition of concentrated investments, such as closely-held businesses, farms, and real estate holdings.
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