26 USC § 734 - Adjustment to basis of undistributed partnership property where
(a)
General rule
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.
(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
The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in section
755.
(a)
General rule
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.
(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
The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in section
755.
Source
(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.)
Amendments
2005—Subsec. (a). Pub. L. 109–135, § 403(bb)(1), inserted “with respect to such distribution” before period at end.
Subsec. (b). Pub. L. 109–135, § 403(bb)(2), reenacted heading without change and amended introductory provisions generally. Prior to amendment, introductory provisions read as follows: “In the case of a distribution of property to a partner, a partnership, with respect to which the election provided in section
754 is in effect or unless there is a substantial basis reduction, shall—”.
2004—Pub. L. 108–357, § 833(c)(5)(A), substituted “Adjustment to basis of undistributed partnership property where section
754 election or substantial basis reduction” for “Optional adjustment to basis of undistributed partnership property” in section catchline.
Subsec. (a). Pub. L. 108–357, § 833(c)(1), inserted “or unless there is a substantial basis reduction” before period at end.
Subsec. (b). Pub. L. 108–357, § 833(c)(2), inserted “or unless there is a substantial basis reduction” after “section
754 is in effect” in introductory provisions.
Subsec. (d). Pub. L. 108–357, § 833(c)(3), added subsec. (d).
Subsec. (e). Pub. L. 108–357, § 833(c)(4), added subsec. (e).
1984—Subsec. (b). Pub. L. 98–369inserted at end “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.”
Effective Date of 2005 Amendment
Amendment by Pub. L. 109–135effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) ofPub. L. 109–135, set out as a note under section
26 of this title.
Effective Date of 2004 Amendment
Pub. L. 108–357, title VIII, § 833(d)(3),Oct. 22, 2004, 118 Stat. 1592, provided that: “The amendments made by subsection (c) [amending this section] shall apply to distributions after the date of the enactment of this Act [Oct. 22, 2004].”
Effective Date of 1984 Amendment
Section 78(b) ofPub. L. 98–369provided that: “The amendment made by subsection (a) [amending this section] shall apply to distributions after March 1, 1984, in taxable years ending after such date.”
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The most recent Classification Table update that we have noticed was Thursday, March 14, 2013
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| 26 USC | Description of Change | Session Year | Public Law | Statutes at Large |
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