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partner must be allocated items of income and gain to the extent of
the greater of (1) the partner’s share of the decrease in minimum
gain allocable to the disposition of partnership property subject
to nonrecourse liabilities, or (2) the deficit balance in such
partner’s capital account at the end of the year. See sec. 1.704-
1T(b)(4)(iv)(e)(2), Temporary Income Tax Regs., supra. Here, even
according to respondent’s calculations, THEI’s share of the
decrease in minimum gain allocable to the disposition of property
is $3,042,812.5 THEI’s negative capital account at the end of
1990, however, was $5,920,614. Under the regulations, THEI is
allocated the greater of these amounts, that is, $5,920,614. Under
the comparative liquidation test, allocation of the latter amount
automatically is sufficient to eliminate THEI’s negative capital
account.
Nor are we persuaded by respondent’s related contention that,
before taking into account any minimum gain chargebacks, THEI’s
negative capital account of $5,920,614 must be increased by a
deemed obligation to restore $3,042,812. As noted above, this
amount represents respondent’s computation of THEI’s share of the
decrease in minimum gain allocable to the disposition of property.
Respondent contends that this restoration would provide a negative
5 Petitioner questions the accuracy of the $3,042,812
figure. Because of our resolution of this issue, we need not,
and do not, make specific findings as to whether the figure is
correct.
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