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).

asked 18 Nov '09, 17:07

Justin's gravatar image

Justin
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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).

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answered 18 Nov '09, 18:10

Brent%20Berkman's gravatar image

Brent Berkman
3.1k413
accept rate: 13%

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

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answered 30 Nov '09, 00:26

EAgent's gravatar image

EAgent
5.2k414
accept rate: 6%

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

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answered 14 Dec '09, 20:07

SandySea's gravatar image

SandySea
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accept rate: 7%

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Asked: 18 Nov '09, 17:07

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Last updated: 08 Feb '10, 23:25