Partnerships Distributions, Sales, and Exchanges合伙企业的分布，销售，和交流.pptVIP

CCH Federal Taxation Comprehensive Topics CCH Federal TaxationComprehensive TopicsChapter 20Partnerships—Distributions, Sales, and Exchanges ?2006, CCH, a Wolters Kluwer business 4025 W. Peterson Ave. Chicago, IL 60646-6085 800 248 3248 www.CCHG Distributions—GeneralEffect on Partners Distributions—GeneralEffect on Partners Distributions—General Rules Code Sections 731 to 733 The rules indicated below assume that the partnership DOES NOT make a disproportionate distribution of the Code Sec. 751 “hot” assets. What is a distribution? A distribution is a transfer of value from the P/S to a partner in reference to his interest in the partnership. A distribution may be in the form of money, debt relief, or other property. Any decrease in a partner’s allocable share of P/S debt is treated as a distribution of money. This can result from payment of principal by the P/S on its debt. Also, a draw against a partner’s share of partnership income is a distribution. Distributions—General Rules Code Sections 731 to 733 Will the partnership recognize either a gain or loss on the distribution of property to a partner? Generally no. Even distributions of Code Sec. 1245 or Code Sec. 1250 property do not trigger recognition unless Code Sec. 751(b) applies. Exception: Disproportionate distributions. Distributions—General Rules Code Sections 731 to 733 Will the partner recognize either a gain or loss on the distribution? Capital gain is recognized only if cash or debt relief received is greater than her outside basis. Loss is never recognized. Code Sec. 731(a); Reg. 1.731-1(a)(1). If the cash received is a draw against profits and the amount received is greater than outside basis, gain is NOT recognized. The reason: A distribution reduces outside basis as shown below. However, the profits implied in a draw against profits increases basis by an equal amount. Thus, a cash draw would have a zero effect on outside basis. What effect does the distribution