-35- We believe that because IHCL could not force PLH and PGL to dispose of the property that generated the nonrecourse deductions, petitioner's argument fails. There would be no decrease in PLH's or PGL's minimum gain upon a deemed liquidation of IHCL. Sec. 1.704-1T(b)(4)(iv)(d), Temporary Income Tax Regs., 53 Fed. Reg. 53163 (Dec. 30, 1988). Thus, there would be no minimum gain chargeback to IHCL. Sec. 1.704-1T(b)(4)(iv)(f), Temporary Income Tax Regs., 53 Fed. Reg. 53163 (Dec. 30, 1988). Correspondingly, there would not be, as petitioner contends, an increase in the partners' capital accounts sufficient both to eliminate THEI's deficit account and to pay the positive capital account of Mr. Manchester. To the contrary, petitioner has failed to refute respondent's position that Mr. Manchester alone would be eligible to receive any gain upon liquidation of the partnership under the IHCL Restated Agreement. (That agreement mandates that, upon liquidation, distributions are to be made in accordance with the partners' positive capital account balances.) Accordingly, we reject petitioner's argument that allocation of partnership income to THEI is in accordance with the comparative liquidation test of section 1.704-1(b)(3)(iii), Income Tax Regs.5 5 In this case, we expressly do not decide whether the comparative liquidation test in sec. 1.704-1(b)(3)(iii), Income Tax Regs., would take into account the dissolution of lower tier partnerships when the upper tier partnership (whose allocations are at issue) can compel such a dissolution.Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Next
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