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paragraph (b) of section 1.743-1.[9] [Citations
omitted.]
Upon a distribution of partnership property, each partner’s
basis in his partnership interest is allocated among the
distributed assets in proportion to the assets' respective bases
to the partnership. Sec. 732(b) and (c). The partnership's
bases in its assets may be adjusted under section 743(b) before
the partnership distribution to reflect changes in the fair
market value of partnership property in relation to the
partnership's adjusted bases in the assets. The partnership’s
basis, after being adjusted in accord with section 743(b), is
then used to allocate basis among the distributed assets. Upon
recontribution of the property to the new partnership, the
partnership takes the partner's basis in the property at the time
of contribution. Sec. 723.
In this case, a section 708(b) constructive termination
would have occurred due to the sale of more than a 50-percent
partnership interest. The assets of Bowlen I, including the
Broncos franchise and professional football player contracts,
would be deemed to have been distributed to Bowlen and Adams and
recontributed to a new partnership. Sec. 1.708-1(b)(1)(iv),
9 Sec. 1.708-1(b)(iv), Income Tax Regs., was amended by T.D.
8717, 1997-24 I.R.B. 5 (May 8, 1997), to apply to sec. 708
terminations occurring after May 8, 1996. The amended regulation
would not apply in this case. The changes may cause a result
different than the one dictated by the regulations in existence
for the 1984 taxable year, the year in which a sale of a 50-
percent interest in Bowlen I occurred.
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