- 36 - accord with section 743(b) prior to a distribution to a partner who acquired his interest in the absence of a section 754 election, if three conditions exist: (1) The fair market value of the partnership's property (other than money) exceeds 110 percent of its adjusted basis to the partnership at the time the partnership interest was acquired, (2) upon liquidation of the partner's interest in the partnership immediately after acquisition, an allocation of basis under section 732(c) would have shifted basis to depreciable, depletable, or amortizable property from property not subject to these allowances, and (3) a special basis adjustment under section 743(b) would have changed the basis to the transferee partner of property actually distributed. Sec. 1.732-1(d)(4), Income Tax Regs.; see Rudd v. Commissioner, 79 T.C. 225, 240-246 (1982). The partnership did not have a section 754 election in effect for 1984. Up to this point, the parties remain in accord. Their disagreement goes to the amount of the fair market value of the player contracts and whether the section 732(d) provisions applied. The partnership's accountant determined that the section 732(d) mandatory basis adjustment rules applied, and the player contract bases were adjusted in accord with section 743(b) prior to the deemed distribution. The partnership used the section 743(b) adjusted basis, i.e., their purported fair market values,Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Next
Last modified: May 25, 2011