Disallowance of certain partnership loss transfers.

Tax Adviser, The, January, 2005 by Crnkovich, Robert; Schneider, Steven

If a partner contributes property to a partnership, generally, neither the contributing partner nor the partnership recognizes any gain or loss at the time of the contribution. The partnership takes the property, at an adjusted basis equal to the contributing partner's adjusted basis in the property. The contributing partner increases its basis in its partnership interest by the contributed property's adjusted basis. In addition, a partnership does not adjust the basis of partnership property following the transfer of a partnership interest, unless the partnership has elected under Sec. 754 to make basis adjustments.

New Law

Sec. 704(c)(1)(C)--contributions of BIL property: According to AJCA Section 833, a built-in-loss (BIL) may be taken into account...

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