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Subchapter K contains several detailed provisions governing basis
adjustments and allocations in partnership transactions. See
secs. 732, 743, 754, and 755. Generally, subchapter K employs
the entity approach in treating transfers of partnership
interests. The sale of a partnership interest is treated as the
sale of a single capital asset rather than as a transfer of the
individual assets of the partnership. See secs. 741 and 742.
Aggregate concepts, however, are also employed upon the
transfer of partnership interests. For example, the basis of
partnership property may be adjusted under the partnership
provisions upon the sale of a partnership interest in accordance
with section 743(b). The basis adjustment under section 743(b)
places a buying partner in the same position as if that partner
had purchased an undivided proportionate share of the partnership
property. Section 743(b) enables the purchaser of a partnership
interest to increase the depreciable basis of appreciated
partnership property to parallel the acquisition costs. Section
743(b) also protects a new partner by increasing basis to avoid
taxation on any inflated gains that could occur if the
partnership interest is later sold.
These basis adjustments were statutorily provided to
individuals who purchase partnership interests, and we are
reluctant to vary from this approach without a clear legislative
mandate for partnerships owning sports franchises. The
partnership here applied the section 743(b) special basis
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