In a proportionate nonliquidating distribution of a capital asset South africafreesex
LMSB-04-1107-076 Revised 12/2007 NOTE: This guide is current through the publication date.Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.Although the general rule aims to treat partnership distributions as nontaxable events, the exceptions can quickly overshadow the general rule.
Assuming that the partner has enough outside basis, property distributed will have a straight carryover basis. The exception to this general rule occurs when the partnership’s adjusted basis in the property (the “inside basis”) exceeds the distributee partner’s outside basis.Proportionate (pro rata) distributions are distributions in which the partner’s share of the value of IRC section 751 and non-IRC section 751 assets remains unchanged after the distribution.The regular distribution rules apply in these instances.The determination of whether a partner is distributed a proportionate share of IRC section 751 assets is determined based on the fair market value of the assets distributed instead of the bases of the assets.See the discussion later in this chapter regarding disproportionate distributions.
Example 4-1 Mike and Larry are partners in an investment partnership.