Abstract
This Article is divided into ten parts. In Part II, the purpose and application of the section 743(b) basis adjustment is examined. The adjustment, if elected, generally applies to the transfer of a partnership interest by sale or exchange or by death. Part III discusses the rules governing the allocation of the overall section 743(b) adjustment to the transferee's share of the assets of the partnership.
In Part IV, the purpose and application of the section 734(b) basis adjustment is considered. Such adjustments generally arise on the distribution of partnership assets to a partner in the process of reducing his or her interest in the enterprise. Part V explores the rules governing the allocation of such an adjustment to the retained assets of the partnership.
Part VI examines the elective basis adjustment of section 732(d). That provision attempts, under specified circumstances, to afford a distributee partner the same results which the section 743(b) basis adjustment would have provided had the partnership elected under section 754.
Part VII assesses the tax planning possibilities as well as the traps for the unwary in making or failing to make the election for basis adjustments. In certain settings, "double taxation" may ensue if the partnership does not elect. In others, duplicate losses may arise.
Parts VIII and IX consider the case for and the case against continuing the elective aspects of these basis adjustments. The Article concludes that the elective aspect of basis adjustments conflicts with sound tax policy principles and calls for legislative amendments eliminating the election and mandating such adjustments in all cases.
Recommended Citation
Philip F. Postlewaite,
Optional Basis Adjustments Under Subchapter K: Trap for the Unwary, Tax Planning Tool, or Both? Should they be Mandatory?,
15 Fla. Tax Rev.
(2014).
Available at: https://scholarship.law.ufl.edu/ftr/vol15/iss1/4