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such dispositions of property will automatically generate gain “in
an amount that is at least equal to” the minimum gain that must be
charged back. Sec. 1.704-1T(b)(4)(iv)(a)(2), Temporary Income Tax
Regs., supra. There is thus no occasion to carry over any "excess"
of a decrease in minimum gains.4
Respondent also attacks petitioner’s assumption that the
allocation of minimum gain will suffice to offset IHCL’s negative
capital account. Respondent argues that even if THEI properly
included IHCL’s partnership minimum gain in the computation of the
liquidation proceeds, IHCL improperly allocated enough of its
partnership minimum gain to THEI to offset THEI’s negative capital
account. Respondent maintains that IHCL “has not computed each
partner’s share of partnership minimum gain.”
We disagree. As noted above, petitioner has demonstrated to
our satisfaction that IHCL’s share of the minimum gain chargeback
was $7,369,977 at the end of 1990, and $7,437,891 at the end of
1991. Moreover, the applicable regulations provide that each
4 The regulations, however, do not provide that other
types of decreases in partnership minimum gain will, by
themselves, generate gain. For example, a partnership may choose
to pay down the principal of its nonrecourse debt. That payment
would diminish the amount by which the partnership’s liability
exceeds its basis in the property. Hence, the payment would
decrease minimum gain. The parenthetical language in the
regulation quoted by respondent apparently refers to that
possibility. In such cases, where the net decrease in minimum
gain exceeds annual income or gain, that language appears to
require allocations of minimum gain for subsequent years. That
matter, however, is not presently before us.
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