- 62 -
T.D. 8707, 1997-1 C.B. 128, 130. Thus, the examples contained in
the regulation, which are the only portion of the text of the
regulation describing “situations that would be considered
abusive”, presumably illustrate the universe of circumstances
considered abusive for purposes of section 731(c).30
Countryside’s deemed distribution of the AIG notes to Mr.
Winn and Mr. Curtis was not part of an abusive transaction as
described in section 1.731-2(h), Income Tax Regs.
IV. Conclusion
We conclude that the liquidating distribution, conceded by
participating partner (for purposes of the motion) to be a
distribution of the AIG notes, constituted a distribution of
nonmarketable securities resulting in nonrecognition of gain to
30 In a recent article, Gall & Franklin, “Partnership
Distributions of Marketable Securities”, 117 Tax Notes 687, 710
(Nov. 12, 2007), the authors conclude that neither the examples
in the legislative history of sec. 731(c)(7) (which authorizes
regulations “necessary or appropriate to carry out the purposes
of * * * [sec. 731(c)], including regulations to prevent the
avoidance of such purposes”) nor the examples in the antiabuse
regulation itself “involve the extension of the rules of section
731(c) to treat an asset that is not a marketable security as a
marketable security.”
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