To view this Portfolio, take a free trial to Bloomberg BNA Tax & Accounting This Portfolio is available with a subscription to Bloomberg BNA Tax & Accounting, a comprehensive research solution including over 500 Tax Management Portfolios, practice tools, primary sources and timely news. 720-2nd, Partnership Transactions—Section 751 Property, analyzes the federal income tax consequences of (1) a sale or exchange of a partnership interest where the partnership owns a §751(a) property (i.e., unrealized receivables and inventory items) and (2) a distribution from a partnership owning §751(b) property (i.e., unrealized receivables and inventory items which have appreciated substantially in value) where such distribution has the effect of changing the proportionate interests of the partners in the §751(b) property. Review of Overall Results of the Application of § 751(b) G. Tax Reporting Obligations - Statements Required to Be Filed by Partnership and Distributee Partners I. Other Property Subject to Recapture by Reference to § 1245 3. Oil, Gas, Geothermal, and Other Mineral Property d. Stock of Domestic International Sales Corporations f.
Sale of a partnership interest generally gives the selling partner capital gain. Examples of the Seven-Step Application of Section 751(b) 1. Method of Accounting (Including Long-term Contract Method) 5. Adjusted Tax Basis of Unrealized Receivables for Services C. Property Subject to Other Ordinary Income Recapture or Characterization Listed in § 751(c) a.
For purposes of paragraph (1), if a corporation acquires (other than in a distribution from a partnership) stock the basis of which is determined (by reason of being distributed from a partnership) in whole or in part by reference to subsection (a)(2) or (b), the corporation shall be treated as receiving a distribution of such stock from a partnership.
If the property held by a distributed corporation is stock in a corporation which the distributed corporation controls, this subsection shall be applied to reduce the basis of the property of such controlled corporation.
a corporation (hereafter in this subsection referred to as the “corporate partner”) receives a distribution from a partnership of stock in another corporation (hereafter in this subsection referred to as the “distributed corporation”),then an amount equal to such excess shall be applied to reduce (in accordance with subsection (c)) the basis of property held by the distributed corporation at such time (or, if the corporate partner does not control the distributed corporation at such time, at the time the corporate partner first has such control).
The amount of the reduction under paragraph (1) shall not exceed the amount by which the sum of the aggregate adjusted bases of the property and the amount of money of the distributed corporation exceeds the corporate partner’s adjusted basis in the stock of the distributed corporation.
The other shareholders feel that the tracts will appreciate at about the same rate, so they are willing to distribute any of the tracts. ’s shares would be redeemed, and because he is unrelated to the remaining shareholders, the redemption would qualify for stock sale (capital gain) treatment as a complete termination of a shareholder’s interest under Sec. A corporation is generally allowed to recognize tax losses when depreciated property is distributed to shareholders in complete liquidation of the corporation (Sec. cannot deduct a loss on a nonliquidating distribution of depreciated property.
Conversely, if it distributes appreciated property it must recognize gain as if it had sold the property to the shareholder for its FMV.
The Secretary may by regulations require the application of this subsection in the case of a distribution to a transferee partner, whether or not made within 2 years after the transfer, if at the time of the transfer the fair market value of the partnership property (other than money) exceeded 110 percent of its adjusted basis to the partnership.
Nonliquidating corporate distributions are distributions of cash and/or property by a continuing corporation to its shareholders.
At the shareholder level, a nonliquidating corporate distribution can produce a variety of tax consequences, including taxable dividend treatment, capital gain or loss, or a reduction in stock basis.
Solution Manual for Pearsons Federal Taxation 2017 Comprehensive 30th Edition by Thomas R.
Depreciation, Cost Recovery, Amortization, and Depletion 11. Special Tax Computation Methods, Tax Credits, and Payment of Tax Corporations 1.