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selling partners. Under section 751, the selling partner
(Kaiser) would be required to recognize any gain attributable to
the amortization deductions on the player contracts as ordinary
income. Sec. 751(a), (c). Section 751 would prevent the selling
partner from converting section 1245 depreciation recapture
income from the player contracts into capital gain. Accordingly,
without considering section 1056, the seller's reporting
requirements are congressionally mandated under subchapter K and
section 1245. The selling and buying partners are bound to
allocate the purchase price of the partnership interest to
particular section 751 partnership assets as provided in the
terms of their sales agreement. Sec. 1.751-1(a)(2), Income Tax
Regs. There is no subchapter K provision similar to section
1056;12 however, under subchapter K, the focus is not on
inconsistent asset valuations by individuals buying and selling
partnership interests.
Respondent also relies on the Staff of the Joint Committee
on Taxation, General Explanation of the Tax Reform Act of 1976
(J. Comm. Print 1976) (hereinafter General Explanation) as
support for the position that the term "sale or exchange" as used
in section 1056 includes a sale of a partnership interest in a
sports team. The General Explanation states at 86 that section
12 Under sec. 1056, to prevent a buyer from inflating the
basis of player contracts, the buyer is limited to the seller's
basis and any recognized gain on the contracts.
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