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Petitioner contends that section 1056 is unambiguous, makes
no reference to partnership transactions, and applies only to
transactions directly involving sports franchises not including
the sale of a partnership interest. Finally, petitioner argues
that legislative history is inconclusive and, in any event,
irrelevant because the statute is unambiguous. Because
partnerships can be and have been treated as an aggregate or
entity, we must disagree with petitioner's contention that
section 1056 is unambiguous. Petitioner is of the view that the
entity approach is to be applied to Internal Revenue Code
provisions that are outside of subchapter K unless Congress
provides otherwise. No such presumption favoring the entity
approach exists.
Congress used the pervasive tax terminology "sale or
exchange" to categorize the transactions subject to section
1056(a) basis provisions and limitations. Two types of transfers
of sports franchises were expressly exempted from the section
1056(a) basis limitation, section 1031 like-kind exchanges and
transfers from a decedent. Sec. 1056(b). Neither exception
references partnership interests or provides guidance, one way or
the other, on the congressional intent. Section 1056 does not
mention the transfer of an interest in a partnership holding a
sports franchise. Moreover, the legislative history does not
contain any reference to the imposition of the basis limitation
rules of section 1056 on the transfer of partnership interests.
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