§ 755. Rules for allocation of basis

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(a)General rule Any increase or decrease in the adjusted basis of partnership property under section 734(b) (relating to the optional adjustment to the basis of undistributed partnership property) or section 743(b) (relating to the optional adjustment to the basis of partnership property in the case of a transfer of an interest in a partnership) shall, except as provided in subsection (b), be allocated—

(1)in a manner which has the effect of reducing the difference between the fair market value and the adjusted basis of partnership properties, or

(2)in any other manner permitted by regulations prescribed by the Secretary.

(b)Special rule In applying the allocation rules provided in subsection (a), increases or decreases in the adjusted basis of partnership property arising from a distribution of, or a transfer of an interest attributable to, property consisting of—

(1)capital assets and property described in section 1231(b), or

(2)any other property of the partnership,

shall be allocated to partnership property of a like character except that the basis of any such partnership property shall not be reduced below zero. If, in the case of a distribution, the adjustment to basis of property described in paragraph

(1)or

(2)is prevented by the absence of such property or by insufficient adjusted basis for such property, such adjustment shall be applied to subsequently acquired property of a like character in accordance with regulations prescribed by the Secretary.

(c)No allocation of basis decrease to stock of corporate partner In making an allocation under subsection

(a)of any decrease in the adjusted basis of partnership property under section 734(b)—

(1)no allocation may be made to stock in a corporation (or any person related (within the meaning of sections 267(b) and 707(b)(1)) to such corporation) which is a partner in the partnership, and

(2)any amount not allocable to stock by reason of paragraph

(1)shall be allocated under subsection

(a)to other partnership property.

Gain shall be recognized to the partnership to the extent that the amount required to be allocated under paragraph

(2)to other partnership property exceeds the aggregate adjusted basis of such other property immediately before the allocation required by paragraph (2).

(Aug. 16, 1954, ch. 736, 68A Stat. 252; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 108–357, title VIII, § 834(a), Oct. 22, 2004, 118 Stat. 1592.)

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Public Law 108–357
To amend the Internal Revenue Code of 1986 to remove impediments in such Code and make our manufacturing, service, and high-technology businesses and workers more competitive and productive both at Oct. 22, 2004[[H

9 references not yet in our index

Aug. 16, 1954, ch. 736
68A Stat. 252
Pub. L. 94–455, title XIX, § 1906(b)(13)(A)
90 Stat. 1834
Pub. L. 108–357, title VIII, § 834(a)
118 Stat. 1592
Pub. L. 108–357
Pub. L. 94–455
Pub. L. 108–357, title VIII, § 834(b)

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§ 755

Rules for allocation of basis

Fed. Reg.×2

Stat.×1

ActAug. 16, 1954, ch. 736

Stat.68A Stat. 252

Pub. L.Pub. L. 94–455, title XIX, § 1906(b)(13)(A)

Stat.90 Stat. 1834

Pub. L.Pub. L. 108–357, title VIII, § 834(a)

Cites 9 · showing 5Cited by 3 across 2 sources