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adjustments believing that the mandatory basis adjustment of
section 732(d) applied. The mandatory basis adjustment prevents
a buying partner from shifting basis allocation from
nondepreciable or unamortizable property to depreciable or
amortizable property under the section 732(c) basis allocation.
Similarly, section 1056 is intended to prevent overvaluation of
amortizable player contracts and undervaluation of the
unamortizable sports franchise by buyers of sports teams. The
only difference, however, is that the partnership provisions do
not restrict the basis adjustment of a particular partnership
asset to the partnership's presale basis plus any gain recognized
by the selling partner.
We are satisfied that subchapter K provisions are sufficient
to determine the basis of partnership property and include
sufficient safeguards (such as section 732(d) and accompanying
regulations) to prevent inflation of the depreciable or
amortizable basis of property.14 We are also satisfied that
Bowlen I did not overvalue the player contracts in issue. In
some respects, the partnership's player contract valuation
complies with the section 1056(d) provision involving the
14 We recognize, however, that subch. K may permit a
purchaser of a partnership interest to obtain increased
amortizable basis in the player contracts even though the selling
partner may not have recognized depreciation recapture income on
those contracts. This could occur when a buying partner and
selling partner have not allocated the total purchase price of
the partnership interest among the individual partnership assets
in a sales contract.
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