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equally by two of the taxpayer’s principal shareholders. Upon
transfer of the Washington properties to the partnership, the
managing general partner made a pro rata distribution of the
interests in the partnership (partnership units) to the
taxpayer’s shareholders on the basis of one partnership unit for
each 5 shares of common stock. The taxpayer was not a partner in
the partnership and received no partnership units.
The issue decided in Pope & Talbot, Inc. I was whether gain
from the distribution of appreciated property under former
section 311(d),14 the predecessor to section 311(b)(1), is
determined as if the taxpayer had sold the Washington properties
in their entirety for their fair market value, or by reference to
the value of the property interests, i.e., the partnership units,
received by each shareholder. We concluded that gain from the
distribution of appreciated property under former section 311(d)
must be determined as if the taxpayer had sold the Washington
properties for their fair market value on the date of the
distribution. Pope & Talbot, Inc. v. Commissioner, supra at 584.
We reached our conclusion by examining the language and
purpose of former section 311(d). Former section 311(d), like
section 311(b)(1), required gain to be calculated “as if the
property distributed had been sold at the time of the
14Sec. 311(d)(1) was amended and recodified as sec.
311(b)(1) by the Tax Reform Act of 1986, Pub. L. 99-514, sec.
631(c), 100 Stat. 2272.
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