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The issue of whether any gain should have been recognized to
Countryside, Mr. Winn, and/or Mr. Curtis as a result of the
December 26, 2000, distribution of Countryside’s 99-percent
interest in CLPP is governed, in the first instance, by sections
731 through 733 and section 752.
Section 731(a)(1) provides, in pertinent part, that, in the
case of a partnership distribution to a partner, gain shall not
be recognized to the recipient partner “except to the extent that
any money distributed exceeds the adjusted basis of such
partner’s interest in the partnership immediately before the
distribution”. Section 731(b) provides: “No gain or loss shall
be recognized to a partnership on a distribution to a partner of
property, including money.”5 Section 731(c)(1) provides that,
for purposes of section 731(a)(1), the term “money” includes
“marketable securities”, which are to be taken into account at
fair market value as of the distribution date. Section
731(c)(2)(A) defines the term “marketable securities” to mean
“financial instruments * * * which are, as of the date of
distribution, actively traded (within the meaning of section
4(...continued)
have gain recognized to them on the liquidating distribution is
whether that distribution constituted, in substance, a
distribution to Mr. Winn and Mr. Curtis of either money or
“marketable securities”, which are treated as money under sec.
731(c)(1). That issue involves a partnership item pursuant to
secs. 301.6231(a)(3)-1(a)(4)(ii) and (c)(3)(ii) and (iv), Proced.
& Admin. Regs. Therefore, we have jurisdiction to decide the
nonrecognition of gain issue.
5 Respondent does not allege that Countryside recognized
gain as a result of the liquidating distribution.
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Last modified: March 27, 2008