§ 1.732-1T - Basis of distributed property other than money (temporary).

§ 1.732-1T Basis of distributed property other than money (temporary).

(a) and

(b) [Reserved]. For further guidance, see § 1.732-1(a) and (b).

(c) Allocation of basis among properties distributed to a partner -

(1) General rule -

(i) Unrealized receivables and inventory items. Except as provided in paragraph (c)(1)(iii) of this section, the basis to be allocated to properties distributed to a partner under section 732(a)(2) or (b) is allocated first to any unrealized receivables (as defined in section 751(c)) and inventory items (as defined in section 751(d)(2)) in an amount equal to the adjusted basis of each such property to the partnership immediately before the distribution. If the basis to be allocated is less than the sum of the adjusted bases to the partnership of the distributed unrealized receivables and inventory items, the adjusted basis of the distributed property must be decreased in the manner provided in § 1.732-1(c)(2)(i). See § 1.460-4(k)(2)(iv)(D) for a rule determining the partnership's basis in long-term contract accounted for under a long-term contract method of accounting.

(ii) Other distributed property. Any basis not allocated to unrealized receivables or inventory items under paragraph (c)(1)(i) of this section or to stock of persons that control the corporate partner or to the corporate partner's stock under paragraph (c)(1)(iii) of this section is allocated to any other property distributed to the partner in the same transaction by assigning to each distributed property an amount equal to the adjusted basis of the property to the partnership immediately before the distribution. However, if the sum of the adjusted bases to the partnership of such other distributed property does not equal the basis to be allocated among the distributed property, any increase or decrease required to make the amounts equal is allocated among the distributed property as provided in § 1.732-1(c)(2).

(iii) Stock distributed to the corporate partner. If a partnership makes a distribution described in § 1.337(d)-3T(e)(1), then for purposes of this section, the basis to be allocated to properties distributed under section 732(a)(2) or (b) is allocated first to the Stock of the Corporate Partner, as defined in § 1.337(d)-3T(c)(2), before the distribution of any other property (other than cash). The amount allocated to the Stock of the Corporate Partner is as provided in § 1.337(d)-3T(e)(2).

(2) through (5)

(i) [Reserved]. For further guidance, see § 1.732-1(c)(2) through (c)(5)(i).

(ii) Exception. Notwithstanding paragraph (c)(5)(i), the first sentence of each of paragraphs (c)(1)(i) and (c)(1)(ii) of this section, and paragraph (c)(1)(iii) of this section in its entirety, apply to distributions of Stock of the Corporate Partner, as defined in § 1.337(d)-3T(c)(2), that occur on or after June 12, 2015.

(d) and

(e) [Reserved]. For further guidance, see § 1.732-1(d) and (e).

(f) Expiration date. This section expires on June 11, 2018.

[T.D. 9722, 80 FR 33411, June 12, 2015, as amended at 80 FR 38941, July 8, 2015]