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partnership--not the liquidation of the partnership. TRLPA section
6.03 sets forth limitations on a limited partner's withdrawal from
a partnership. However, a limited partner may withdraw from a
partnership without requiring the dissolution and liquidation of
the partnership. In this regard, we conclude that TRLPA section
6.03 is not a “limitation on the ability to liquidate the entity”
within the meaning of section 25.2704-2(b), Gift Tax Regs.
Respondent's position herein is inconsistent with section
25.2704-2(d) (Example 1), Gift Tax Regs., which states in pertinent
part:
D owns a 76 percent interest and each of D's
children, A and B, owns a 12 percent interest in General
Partnership X. The partnership agreement requires the
consent of all the partners to liquidate the partnership.
Under the State law that would apply in the absence of
the restriction in the partnership agreement, the consent
of partners owning 70 percent of the total partnership
interests would be required to liquidate X. * * * The
requirement that all the partners consent to the
liquidation is an applicable restriction. * * *
Significantly, the restriction on liquidation in the partnership
agreement described in the example was not compared with a State
law provision (such as TRLPA section 6.03) pertaining to withdrawal
from a partnership. Rather, the terms of the partnership agreement
are compared with a partnership liquidation provision similar to
TRLPA section 8.01. With these points in mind, we reject
respondent's argument regarding TRLPA section 6.03.
We are mindful that the Secretary has been vested with broad
regulatory authority under section 2704(b)(4). However, the
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