Jacob R. Ramsburg, Jr. and Norma J. Ramsburg - Page 35

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          of any such gain or all of any such loss, as the case may be, was            
          to be recognized under section 731(a).28  Assuming arguendo that             

               28We seriously doubt that sec. 731(a) required petitioners              
          to recognize all of any gain or all of any loss, as the case may             
          be, realized upon Kildare Timmy’s distribution to Mr. Ramsburg of            
          the horses, stud rights, and bank account balance in question.               
          It is significant that if there were a gain realized upon such               
          distribution, the assets that Kildare Timmy distributed to Mr.               
          Ramsburg included not only money but Kildare Timmy’s racing and              
          breeding horses and stud rights.  Under sec. 731(a), gain is not             
          to be recognized except to the extent that any money distributed             
          exceeds the adjusted basis of the partner’s interest in the                  
          partnership immediately before the distribution.  If there were a            
          loss realized upon the distribution by Kildare Timmy to Mr.                  
          Ramsburg of the horses, stud rights, and bank account balance in             
          question, sec. 731(a)(2) provides that loss is not to be recog-              
          nized except that, upon a distribution in liquidation of a                   
          partner’s interest in a partnership, where no property is dis-               
          tributed other than money, unrealized receivables as defined in              
          sec. 751(c), and inventory as defined in sec. 751(d), loss is to             
          be recognized to the extent of the excess of the adjusted basis              
          of the partner’s interest in the partnership over the sum of                 
          (1) any money distributed and (2) the basis to the distributee,              
          as determined under sec. 732, of any such unrealized receivables             
          and any such inventory.  In this connection, for purposes of sec.            
          731(a)(2), each of Kildare Timmy’s racing and breeding horses and            
          its stud rights may constitute an unrealized receivable as                   
          defined in sec. 751(c), but only to the extent of the amount to              
          be treated as gain to which sec. 1245(a) would apply if at the               
          time Kildare Timmy distributed each such asset to Mr. Ramsburg,              
          that partnership had sold each such asset at its fair market                 
          value.  See secs. 731(a)(2)(B), 751(c).  Thus, for purposes of               
          sec. 731(a)(2), any determination of whether Kildare Timmy                   
          distributed “unrealized receivables” to Mr. Ramsburg depends on              
          Kildare Timmy’s basis in and the fair market value of each such              
          horse and stud rights.  Even if there were any sec. 1245(a) gain             
          associated with any of Kildare Timmy’s horses or stud rights,                
          none of any loss realized by Mr. Ramsburg upon the distribution              
          to him by Kildare Timmy of the horses, stud rights, and bank                 
          account balance in question would be recognized under sec.                   
          731(a)(2).  That is because a distribution of an unrealized                  
          receivable in the form of sec. 1245(a) gain necessarily involves             
          the distribution of the underlying asset (i.e., each of the                  
          horses and the stud rights in question) to which the sec. 1245(a)            
          gain attaches.  Therefore, the distribution in liquidation of Mr.            
                                                              (continued...)           




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