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Further exacerbating the dilemma here, respondent, in accord with
established practices, destroyed the seller's income tax return
that might have shed light on this question.
The $36,121,385 basis for the player contracts used by the
partnership does not exceed the value of the contracts or provide
any tax benefit not otherwise available to the partners.
Amortization of the fair market value in accord with the
partners' acquisition costs for partnership property is an
appropriate deduction under subchapter K. Any tax advantage that
may have occurred in the circumstances of this case would have
been due to the seller's (Kaiser's) failure to report sufficient
gain or his mischaracterization of gain as capital upon the sale
of his partnership interest. Respondent argues, but is unable to
show, that Kaiser was able to have the benefit of capital gain on
the sale of his partnership interest without recapture in the
form of ordinary income of any amortization that may have been
taken on the player contracts.
B. Respondent's Alternative Argument--A Deemed Distribution
and Recontribution of Partnership Property Under Section 731
Constitutes a "sale or exchange" Within the Meaning of Section
1056
Respondent alternatively argues that if we hold that a
partnership is to be treated as an entity for purposes of
applying section 1056, a sale or exchange of the partnership
assets nevertheless occurred under the entity theory.
Responent’s alternative argument is premised on the contention
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