Compilation with Section 754 election

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#1
anepcar  
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texas
I have a new client who has a 754 election on his books. The books are kept on the tax basis, and is asking for us to prepare a compilation on his company. His books all match his tax returns. The question I have is if I am preparing a compilation on the Tax Basis with no disclosures, is there any other special verbiage that needs to be added to the accountant's reports beside stating the financials were prepared on the Tax Basis. How does the end user know that a step-up basis has been taken.
 

#2
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New York
The 754 and 743(b) amounts are not shown on the tax basis compilations that I prepare. They are in relation to outside partners' basis. Financials are on an inside basis.
 

#3
anepcar  
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49
Joined:
20-Jan-2022 3:20pm
Location:
texas
Thanks for your input. But isn't the section 754 election step-up basis making the inside and outside basis to match? So if the compilations are done on a tax basis they exclude the step-up? This is what I am trying to confirm based AICPA regulations, I do not want any surprises during a Peer Review. Have you had any issues with your Peer Review regarding this?

Thanks
 

#4
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46
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No issues with peer review. The only place the 743(b) and 754 amounts should show is on the tax return as a reconciling item and a K-1 deduction/informational section. It never goes on the Balance Sheet or P&L.
 


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