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Question

2

If a partner distributes capital in excess of tax basis capital without a share of debt liabilities to nullify the distribution in excess of tax basis capital, what are the tax consequences to the partner? Hint: See IRC 731(a).

flag	asked Nov 18 at 17:07 Justin 21●1

Brent Berkman · Answer 1 · 2009-11-18 18:10:06Z UTC

Distributions in excess of basis are a partial or full redemption and qualify for long-term capital gain treatment. However, consideration should be give to Section 751 ("hot assets").

An election under Sec 754 should also be considered if it is beneficial to allocate the recognized gain to the inside basis of the depreciable and other assets in accordance with Section 734(b).

EAgent · Answer 2 · 2009-11-30 00:26:16Z UTC

1

Hint? What is this about? Why would you post a question if you knew the answer?

answered Nov 30 at 0:26

EAgent
1,546●9

SandySea · Answer 3 · 2009-12-14 20:07:50Z UTC

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Agreed EAgent. If a "hint" is being applied, then seems to be just another "test" question

answered Dec 14 at 20:07

SandySea
2,715●1●10

Partnership Capital Distributions

3 Answers