The purpose of Section 704(c) is to prevent taxable gain or loss inherent in property at time of contribution from being shifted to another partner- looks to the difference between adjusted tax basis and fair market value upon contribution.
What is a 704 C adjustment?
704(c) is intended to prevent the shifting of tax items among partners when a partner contributes property with a fair market value different from its tax basis to a partnership. 704(c), the allocation of tax items for property contributed with a built-in gain or loss must be made using a reasonable method.
What is built in gain on contributed property?
When a partnership receives a contribution of ap- preciated property from a partner, the partnership has property with a “built-in gain” in the amount of the excess of the fair market value of the prop- erty on contribution (the fair market value being its initial “book value” for partnership purposes) over its tax …
What is 704 C built in gain?
Section 704(c) is intended to ensure that, when a partner contributes built-in-gain or built-in-loss property to the partnership, the contributing partner will bear (and cannot shift to the other partners) the tax consequences of the built-in gain or loss.
What is a 754 adjustment?
Benefit of the Election An IRC Section 754 election allows a partnership to adjust the basis of the property within a partnership under IRC Sections 734(b) and 743(b) when one of two triggering events occur: 1) a distribution of partnership property or 2) certain transfers of a partnership interest.
What are curative allocations?
Curative Allocations means the following allocations of income, gain, loss or deduction. To the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of company income, gain, loss, or deduction pursuant to this Section.
