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Reg. 27040 (July 18, 1988). Allocation of the purchase price to
the individual assets determines the seller's gain or loss on the
sale of the assets and the buyer's bases in the acquired assets.
As initially enacted, section 1060 did not address the
transfer and allocation involving partnership interests. In
1988, section 1060(d) was added specifically to require the use
of the residual method for distributions of partnership property
to partners and for transfers of partnership interests for
purposes of determining the value of goodwill or going concern
value in applying section 755. The 1988 amendment included
detailed provisions to enable section 1060 principles to be
integrated into the generally self-contained provisions of
subchapter K. The absence of express provisions in section 1056
to address partnership transactions more likely indicates that it
does not apply to basis adjustments available to partners who
purchase partnership interests. Any ambiguity or omission in
section 1056 logically could have been cured by amendment.
2. Interplay Between Section 1056 and the Subchapter K
Partnership Provisions
In deciding that section 1056 does not apply to the sale of
a partnership interest, we have considered the effect that
section 1056 would have on the integrity and continuity of
subchapter K. In that regard, petitioner contends that we should
not apply section 1056 on an ad hoc basis to subchapter K because
to do so would undermine the partnership basis provisions.
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