§734 — Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction
43 cases·6 followed·1 distinguished·1 limited·35 cited—14% support
Statute Text — 26 U.S.C. §734
The basis of partnership property shall not be adjusted as the result of a distribution of property to a partner unless the election, provided in section 754 (relating to optional adjustment to basis of partnership property), is in effect with respect to such partnership or unless there is a substantial basis reduction with respect to such distribution.
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—
increase the adjusted basis of partnership property by—
the amount of any gain recognized to the distributee partner with respect to such distribution under section 731(a)(1), and
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
decrease the adjusted basis of partnership property by—
the amount of any loss recognized to the distributee partner with respect to such distribution under section 731(a)(2), and
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.
The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in section 755.
For purposes of this section, there is a substantial basis reduction with respect to a distribution if the sum of the amounts described in subparagraphs (A) and (B) of subsection (b)(2) exceeds $250,000.
For regulations to carry out this subsection, see section 743(d)(2).
For purposes of this section, a securitization partnership (as defined in section 743(f)) shall not be treated as having a substantial basis reduction with respect to any distribution of property to a partner.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.734-1 Optional adjustment to basis of undistributed partnership property
- Treas. Reg. §Treas. Reg. §1.734-1(a) General rule.
- Treas. Reg. §Treas. Reg. §1.734-1(b) Method of adjustment—(1) Increase in basis.
- Treas. Reg. §Treas. Reg. §1.734-1(c) Allocation of basis.
- Treas. Reg. §Treas. Reg. §1.734-1(d) Returns.
- Treas. Reg. §Treas. Reg. §1.734-1(e) Recovery of adjustments to basis of partnership property—(1) Increases in basis.
- Treas. Reg. §Treas. Reg. §1.734-1(i) §1.734-1(i)
- Treas. Reg. §Treas. Reg. §1.734-2 Adjustment after distribution to transferee partner
- Treas. Reg. §Treas. Reg. §1.734-2(a) In the case of a distribution of property by the partnership to a partner who has obtained all or part of his partnership interest by transfer, the adjustments to basis provided in section 743(b) and section 732(d) shall be taken into account in applying the rules under section 734(b).
- Treas. Reg. §Treas. Reg. §1.734-2(b) §1.734-2(b)
43 Citing Cases
Attached to both returns was the following statement, signed by Oriole23 − as general partner of OPLP: Otay Project LP hereby elects under Section 754 of the Internal Revenue Code to apply the provision of § 734 (b) and § 743 (b) in adjusting the basis of the partnership 23 The first statement attached to the March 2007 Form 1065 was signed by Al as general partner, and the second statement attached to the April 2007 Form 1065 was signed by Jim as VP of Oriole.
sec. 723 (providing that the basis ofpropertycontributed to a partnership by a partner shall be the adjusted basis ofsuch propertyto the contributing partner at the time ofcontribution, increased by the amount ofany gain recognized at contribütion) sec. 734 (providing fules for the adjustment of basis in partnership propertyto account for distributions ifthe partnership has made an election under sec. 754); sec. 743 (providing rules for the adjustment of basis in partnership propertyto account f
23 (providing that the basis of property contributed to a partnership by a partner shall be the adjusted basis of such property to the contributing partner at the time of contribution, increased by the amount of any gain recognized at contribution); sec. 734 (providing rules for the adjustment of basis in partnership property to account for distributions if the partnership has made an election under sec. 754); sec. 743 (providing rules for the adjustment of basis in partnership property to accou
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
The -16- amendments to section 734 make the basis adjustment rules of that section mandatory to any distribution where there is a substantial basis reduction.
Section 734 adjustment : For the taxable year ended December 25, 1999, it is determined that Wilmington Partners L .P . has failed to establish the character or adjusted bases of the assets distributed by them [sic] to Charles River Partners L.P . Wilmington Partners L .P . has likewise failed to establish that there was any increase to the basis o