- 7 - capital loss of $2,278. DIP reported as to the claimed loss that the 4,500 shares were purchased on August 11, 1999, at a cost of $10,893 and were sold for $8,615. On August 24, 1999, petitioner transferred his interest in DIP to DII, which had been incorporated approximately 8 months earlier. Petitioner and DII reported that transfer as a nontaxable exchange under section 351, and DII claimed a carryover basis in the transferred partnership interest equal to petitioner’s basis in DIP. As a result of this transfer (and similar contemporaneous transfers made by DIP’s two other partners), DIP dissolved and all of its assets, including the remaining 3,000 shares of INVI stock, were distributed and received by DII. On DIP’s 1999 (final) Form 1065, U.S. Partnership Return of Income, DIP reported for that year that it had realized (1) $1,961 in income, all from tax- exempt interest, and (2) a $110,611 short-term capital loss attributable to the sale of U.S. Treasury notes ($108,333) and the sale of the 4,500 shares of INVI stock ($2,278). DIP also reported that it had paid $167,477 of interest expenses on investment debts and that it had distributed $30,447,106 in cash and/or marketable securities to its partners. Petitioner, as a general partner of DIP, filed DIP’s 1999 return no later than April 17, 2000. At the time of DIP’s dissolution, DIP’s only assets were the INVI stock and minimal cash. Pursuant to section 732(b), DIIPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: November 10, 2007