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that a sale or exchange of a sports franchise and player
contracts within the meaning of section 1056(a) occurred on the
deemed distribution and recontribution of partnership property
attributable to the partnership's constructive section 708
termination. Respondent relies on section 731 as support for the
position that an exchange occurs when a partnership makes a
liquidating distribution of partnership property to its
partners.15
Section 731(a) defines the circumstances under which a
partner recognizes gain or loss from partnership distributions
and provides that "Any gain or loss recognized under this
subsection shall be considered as gain or loss from the sale or
exchange of the partnership interest of the distributee
partner."16 Sec. 731(a). Respondent maintains that there is
tacit recognition in section 731 that a deemed partnership
distribution constitutes a sale or exchange regardless of whether
the partner recognizes gain or loss on the distribution.
Respondent, relying on section 721, continues with the additional
premise that the deemed recontribution of the partnership
15 It is noted that any distribution of property in this
case would have been theoretically deemed to have occurred under
the statutes and regulations and that no actual distribution in
kind occurred.
16 Generally, a partner recognizes gain upon the
distribution of partnership property only to the extent that
money distributed exceeds the partner's basis in his partnership
interest. Sec. 731(a)(1).
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