Partnership installment obligations.Proposed regulations (REG-16033002, 11/21/03) clarify (company) Clarify - A software vendor, specialising in Customer Relationship Management software. Nortel Networks sold Clarify to Amdocs in 2002. http://amdocsclarify.com/. how certain property transfers and dispositions in partnerships are treated for Secs. 704(c) and 737 purposes. If a partnership disposes of Sec. 704(c) property for an installment Regular, partial portion of the same debt, paid at successive periods as agreed by a debtor and creditor. An installment loan is designed to be repaid in certain specified, ordinarily equal amounts over a designated period, such as a year or a number of months. obligation, the obligation itself would be treated as Sec. 704(c) property. The proposed regulations would also clarify that, if a partner contributes a contract that is Sec. 704(c) property to a partnership, and the partnership subsequently acquires property under that contract in a transaction in which less than all of the gain or loss is recognized, the acquired property is treated as Sec. 704(c) property. Background: Sec. 704(c)(1)(A) provides that income, gain, loss or deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. on property contributed to a partnership by a partner is shared among partners to take into account the variation between the basis of the property to the partnership and its fair market value (FMV FMV - full-motion video ) on contribution. Under Sec. 704(c)(1)(B), any partner who contributes Sec. 704(c) property to a partnership must recognize gain or loss on the distribution to another partner within seven years of the contribution. The gain or loss recognized is the amount that would have been allocated to the partner under Sec. 704(c)(1)(A) had the partnership sold the property to the distributee An heir; a person entitled to share in the distribution of an estate. This term is used to denote one of the persons who is entitled, under the statute of distributions, to the personal estate of one who is dead intestate. partner for its FMV at the time of the distribution. Under Sec. 737(a), any partner who contributes Sec. 704(c) property to a partnership can recognize gain on a distribution of property by the partnership to that partner. The gain recognized is the lesser of the amount by which the distributed property's FMV exceeds the distributee partner's adjusted tax basis in the partnership's interest, or the partner's net precontribution gain. Proposed rules: According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. , the proposed regulations would amend Regs. Sec. 1.704-4(d)(1) to provide that an installment obligation received by a partnership and property acquired pursuant to a contributed contract are treated as Sec. 704(c) property for Sec. 704(c)(1)(B) purposes to the extent that the installment obligation or the acquired property is Sec. 704(c) property under Regs. Sec. 1.704-3(a)(8). As a result, if the partnership distributes the installment obligation or property acquired via a contributed contract to a partner other than the contributing partner within seven years of the contribution, the contributing partner may recognize gain or loss under Sec. 704(c)(1)(B) (a similar rule under Regs. Sec. 1.737-2(d)(3) is included in the proposed regulations). The proposed regulations would apply to installment obligations a partnership received in exchange for Sec. 704(c) property and to property acquired after Nov. 23, 2003. |
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