26 USC 734 - Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction

U.S Code last checked for updates: May 16, 2024

§ 734.

Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction

(a)

General rule

(b)

Method of adjustment

In the case of a distribution of property to a partner by a partnership with respect to which the election provided in section 754 is in effect or with respect to which there is a substantial basis reduction, the partnership shall—

(1)

increase the adjusted basis of partnership property by—

(A)

the amount of any gain recognized to the distributee partner with respect to such distribution under section 731(a)(1), and

(B)

in the case of distributed property to which section 732(a)(2) or (b) applies, the excess of the adjusted basis of the distributed property to the partnership immediately before the distribution (as adjusted by section 732(d)) over the basis of the distributed property to the distributee, as determined under section 732, or

(2)

decrease the adjusted basis of partnership property by—

(A)

the amount of any loss recognized to the distributee partner with respect to such distribution under section 731(a)(2), and

(B)

in the case of distributed property to which section 732(b) applies, the excess of the basis of the distributed property to the distributee, as determined under section 732, over the adjusted basis of the distributed property to the partnership immediately before such distribution (as adjusted by section 732(d)).

Paragraph (1)(B) shall not apply to any distributed property which is an interest in another partnership with respect to which the election provided in section 754 is not in effect.

(c)

Allocation of basis

(d)

Substantial basis reduction

(1)

In general

(2)

Regulations

(e)

Exception for securitization partnerships

(Aug. 16, 1954, ch. 736, 68A Stat. 247; Pub. L. 98–369, div. A, title I, § 78(a), July 18, 1984, 98 Stat. 597; Pub. L. 108–357, title VIII, § 833(c)(1)–(5)(A), Oct. 22, 2004, 118 Stat. 1591, 1592; Pub. L. 109–135, title IV, § 403(bb), Dec. 21, 2005, 119 Stat. 2630.)

cite as: 26 USC 734