---
kind: "section"
citation: "26 U.S.C. § 754"
title: "26"
title_heading: "Internal Revenue Code"
number: "754"
heading: "Manner of electing optional adjustment to basis of partnership property"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/754"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter K — Partners and Partnerships"
  - "Part II — Contributions, Distributions, and Transfers"
  - "Subpart D — Provisions Common to Other Subparts"
---

# §754. Manner of electing optional adjustment to basis of partnership property


If a [partnership](/usc/26/761.md?p=a) files an election, in accordance with regulations prescribed by the Secretary, the basis of [partnership](/usc/26/761.md?p=a) [property](/usc/26/317.md?p=a) shall be adjusted, in the case of a [distribution of property](/usc/26/316.md?p=b-2-B), in the manner provided in [section 734](/usc/26/734.md) and, in the case of a transfer of a [partnership](/usc/26/761.md?p=a) [interest](/usc/26/856.md?p=f-1), in the manner provided in section 743. Such an election shall apply with respect to all distributions of [property](/usc/26/317.md?p=a) by the [partnership](/usc/26/761.md?p=a) and to all transfers of [interests](/usc/26/856.md?p=f-1) in the [partnership](/usc/26/761.md?p=a) during the taxable year with respect to which such election was filed and all subsequent taxable years. Such election may be revoked by the [partnership](/usc/26/761.md?p=a), subject to such limitations as may be provided by regulations prescribed by the Secretary.


## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 251; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

## Notes

### Editorial Notes

### Amendments

1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.