109 T.C. No. 20
UNITED STATES TAX COURT
P.D.B. SPORTS, LTD., BOWLEN SPORTS, INC.,
TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 730-96. Filed December 22, 1997.
An individual purchased more than a 50-percent
interest in a partnership, that owned and operated a
professional sports franchise. Partnership's presale
basis in player contracts was 6X. Because more than 50
percent of Partnership's ownership had changed, P
contends that sec. 708, I.R.C., causes a termination
and triggers the partnership basis provisions causing a
stepped-up basis (to fair market value) in the player
contracts to 36X. Partnership claimed amortization
deductions using the 36X basis. R contends that sec.
1056, I.R.C., applies and would limit the amortizable
basis in the player contracts, even though the
contracts were acquired through purchase of an interest
in a partnership. Alternatively, R contends that if
sec. 1056, I.R.C., does not apply to partnership
transactions involving sports franchises, the
partnership's basis would be less than claimed under
subch. K partnership provisions.
Held: Sec. 1056, I.R.C., does not apply to this
partnership transaction involving a sports franchise.
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