-34-
total interest in the partnership capital or profits. Sec.
708(b)(1)(B); cf. Rev. Rul. 87-50, 1987-1 C.B. 157; Rev. Rul. 87-
51, 1987-1 C.B. 158.
If IHCL were to liquidate, it would not have the power to
compel PLH or PGL to dissolve. Nor could IHCL otherwise require
PLH or PGL to transfer its assets, either directly or indirectly.
Those properties would remain under the control of PLH and PGL.
Upon liquidation IHCL could distribute only its partnership
interests in PLH or PGL. The distinction between a partner's
interest in a partnership and the partner's lack of interest in
partnership property is basic. California law follows general
partnership law in providing that "An interest in a limited
partnership is personal property and a partner has no interest in
specific partnership property." Cal. Corp. Code sec. 15671 (West
1991 & Supp. 1995). Federal tax law makes a similar distinction
between interests in partnerships and the holdings of partnerships.
As some commentators have explained, for purposes of the Internal
Revenue Code:
The transferred interest is treated as a separate
intangible asset, detached from the assets of the
partnership. Accordingly, the various Code provisions
governing the amount and character of gain or loss,
basis, and holding period operate with respect to the
transferred partnership interest, rather than the
underlying partnership assets. * * *
McKee et al., Federal Taxation of Partnerships and Partners, par.
15.01, at 15-3 (3d ed. 1997).
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