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1092(d)(1)).”6 Section 731(c)(2)(B)(ii) and (v) includes in the
meaning of the term “marketable securities” (1) “any financial
instrument which, pursuant to its terms or any other arrangement,
is readily convertible into, or exchangeable for, money or
marketable securities”, and (2) “interests in any entity if
substantially all of the assets of such entity consist (directly
or indirectly) of marketable securities”. The term
“substantially all” means 90 percent or more by value. Sec.
1.731-2(c)(3)(i), Income Tax Regs.
Section 732(b) provides that the basis of property (other
than money) distributed by a partnership to a partner in
liquidation of the latter’s interest shall be an amount equal to
the partner’s adjusted basis in such partner’s interest reduced
by any money distributed in the same transaction.
Section 752(a) provides that any increase in a partner’s
share of the liabilities of a partnership shall be considered as
a contribution of money by the partner to the partnership, and
section 752(b) provides that any decrease in a partner’s share of
the liabilities of a partnership shall be considered as a
distribution of money to the partner by the partnership.
Pursuant to section 733, in the case of a nonliquidating
distribution, any such decrease will, first, reduce the partner’s
basis in the partnership (but not below zero). To the extent
such decrease exceeds the partner’s basis in the partnership,
6 See sec. 1.1092(d)-1(a), Income Tax Regs. (“Actively
traded personal property includes any personal property for which
there is an established financial market.”).
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Last modified: March 27, 2008