Withdrawal from a partnership after Citron and Echols.

Two recent judicial decisions have focused renewed attention on the tax implications of withdrawal from a partnership. Until recently, there appeared to be little possibility of leaving a partnership without recognizing a capital gain or loss. However, the Fifth Circuit decision in Echols(1) and its later per curiam decision on the IRS's appeal of the original decision have highlighted the possibility of claiming a loss deduction on the worthlessness of a partnership interest without also abandoning the interest. The Tax Court's decision in Citron(2) confirmed that an ordinary loss can be taken on the abandonment of a partnership interest when the partnership has no liabilities. Further, the Tax Court's refusal to accept Rev. Rul. 76-189(3) in Citron has brought into question the IRS's position that a capital loss results from the termination of a partnership with no assets and no liabilities.

Overview

The tax consequences of an abandonment of a partnership interest or the worthlessness of that interest are not specifically stated in the Code. Instead, the Code specifies what happens when a capital asset is sold or exchanged and leaves other asset dispositions to come under the provisions of Sec. 165. Under Sec. 165(a), uncompensated losses occurring in a trade or business or in an activity undertaken for profit may be deducted, but the character of the loss is not specified. Since neither the abandonment of a capital asset nor the worthlessness of a capital asset generally constitutes a sale or exchange,(4) a disposition of a capital asset by one of these two methods should produce an ordinary loss if no other Code provision applies. Subchapter K modifies this result for a partnership interest if the partnership has liabilities.

When a partner withdraws from a partnership, the transaction generally comes under the subchapter K provisions as a sale or exchange of a capital asset so that any recognized gain or loss is characterized as capital in nature (except to the extent that Sec. 751 applies). This treatment results from the interaction of Secs. 731, 741 and 752: Sec. 741 provides that the sale or exchange of an interest in a partnership is considered the sale or exchange of a capital asset; Sec. 731(a) provides that any gain or loss recognized in a distribution is treated as if it were gain or loss resulting from the sale or exchange of the partnership interest; and Sec. 752(b) provides that any decrease in a partner's share of partnership liabilities will be considered as a distribution of money by the partnership to the partner. These sections mandate the tax results from any termination of a partnership interest when the partner had a share of the partnership's liabilities before the termination. only when the departing partner is not released from a share of the partnership's liabilities can ordinary gain or loss be recognized.(5)

Example 1: S abandons her interest in the XYZ partnership at a time when her basis is $20,000 and she has no share of partnership liabilities under Sec. 752. There is no sale or exchange of S's interest because she receives no consideration in exchange for her partnership interest. Accordingly, the capital loss provisions do not apply, and her loss is a $20,000 ordinary loss.

Example 2: B abandons his interest in the AB partnership at a time when his basis is $ 10,000 and his share of partnership liabilities is $14,000. The remaining partners assume his share of AB's liabilities. Under Sec. 752, B is considered to have received a $14,000 money distribution. The $14,000 deemed distribution is $4,000 greater than his basis in the partnership interest, so a gain must be recognized. Under Sec. 731, the gain is considered to result from a sale or exchange of the partnership interest, and Sec. 741 characterizes gains from the sale of a partnership interest as capital in nature.

Worthlessness of a Partnership Interest

Because Sec. 1222 limits capital gain treatment to the gain or loss from the sale or exchange of a capital asset, Sec. 165(g) creates a deemed sale to ensure that the loss from a worthless security is a capital loss. However, Sec. 165(g)(2) clearly defines a security to include only corporate stock, rights to subscribe to or receive corporate stock, and certain debt instruments of corporations, governments or political subdivisions of governments. There is no comparable provision for a worthless partnership interest. Accordingly, it would seem that the worthlessness of a partnership interest should result in an ordinary loss unless the worthlessness is also accompanied by a release from the partner's share of partnership liabilities.

This position is strengthened by three cases involving insolvent partnerships. In Zeeman,(6) a partner was allowed to claim an ordinary loss for her investment in a limited partnership interest when the partnership became insolvent. The district court clearly stated:

The plaintiff's loss is an ordinary loss. While an interest in a limited or general partnership is a capital asset,..., where the loss materializes from the worthlessness of the interest, without a sale or exchange, the statutory requirements for capital loss treatment are not met.(7)

In fact, the case does not mention liabilities or basis, but rather allows the partner to deduct her entire capital investment amount.

In Tejon Ranch Co.,(8) the Tax Court allowed the general partner to deduct as an ordinary loss his capital investment in a partnership in the year in which the partnership was "insolvent beyond any hope of rehabilitation." Again there was no mention of the partner's basis in his partnership interest or of any liabilities as a portion of that basis.

In a recent partnership case in bankruptcy court, In Re James D. Kreidle, Debtor,(9) the court explicitly discussed the effect of the partnership liabilities on the deduction for worthlessness. in this case, a general partner was allowed to take an ordinary loss for tax purposes equal to the amount of his partnership basis when the partnership became worthless.

In addition, the Court finds that there was no deemed distribution pursuant to [Sec.] 752 of the Tax Code to Debtor at the time the partnership interest became worthless since there was no discharge of liabilities that would have given rise to a decrease in Kreidle's share of [the partnership's] liabilities. As a general partner..., Kreidle remained personally liable on its debts.(10)

In all three cases the partner claimed a loss for worthlessness because of the insolvency of the partnership without abandoning the partnership interest. Accordingly, the partner had not been relieved of any liability that accrued to the partnership interest, and Sec. 752 could not operate to bring the situation under the capital loss rules.(11)

The cases involved partnerships that filed bankruptcy after the worthlessness determination. In 1970, the IRS issued Rev. Rul. 70-355,(12) which stated that a limited partner's loss on the bankruptcy of a partnership was an ordinary loss equal to his basis in the partnership interest after claiming a deduction for his share of all partnership losses. In bankruptcy settings, the IRS clearly sanctions the deduction of an ordinary loss on the worthlessness of a partnership interest.

For many years, the IRS has maintained that worthlessness of a partnership interest and the abandonment of a partnership interest are closely related concepts. The IRS was concerned that a partner would be able to manipulate the timing of his loss deduction on a partnership interest that became worthless by waiting until a later tax year to abandon his interest. To prevent this, the IRS tied the concepts of worthlessness and abandonment together for partnership interests if a partner claimed an abandonment loss. Rev. Rul. 54-581(13) stated: "[A]n abandonment loss is deductible only in the taxable year in which it is actually sustained. An abandonment loss which was actually sustained in a taxable year prior to the year in which the overt act of abandonment took place is not allowable as a deduction in the latter taxable year."

In Finley,(14) the Tax Court also linked the event of worthlessness of the partnership interest to the abandonment of that interest.

The rule to be deduced from the "abandonment" cases, we think, is that a deduction should be permitted where there is not merely a shrinkage of value, but instead, a complete elimination of all value, and the recognition by the owner that his property no longer has any utility or worth to him, by means of a specific act proving his abandonment of all interest in it, which act of abandonment must take place in the year in which the value has actually been extinguished.(15)

Until recently, the IRS had been successful in keeping these two concepts linked together if the partner claimed an abandonment loss. In Echols, John Echols claimed a capital loss on the abandonment of his interest in a partnership in 1976, the year in which he notified the other partners in the partnership that he would no longer make any additional contributions of funds to the partnership. Without these additional contributions, the partnership could not pay its mortgage and ad valorem tax payments on its real estate holding, so the seller foreclosed on the real estate in 1977. While the Tax Court found no abandonment by Echols or by the partnership, the Fifth Circuit reversed this holding, finding that Echols did indeed abandon his interest in the partnership during 1976. More interestingly, in an alternate holding, the Appeals Court held that Echols was entitled to the loss under Sec. 165(a) because the partnership interest was worthless in 1976.

The IRS petitioned for a rehearing on this alternate holding. In spite of Zeeman, Tejon Ranch and Kreidle, the Service wanted the Fifth Circuit to agree that a partnership interest could not be considered worthless until the taxpayer also took some affirmative action to divest himself of the title to the property. In short, the IRS wanted the concepts of worthlessness and abandonment of a partnership interest to be tied together as a single grounds for claiming a loss on a partnership interest. The Fifth Circuit's per curiam 

opinion clearly stated that the two concepts are distinct:

Despite the commissioner's wishful thinking to the contrary, taxpayers are entitled to take loss deductions under Code [Sec.] 165(a), not only for assets that the taxpayer has abandoned, with or without their having become worthless, but also for assets that have become worthless, with or without having been abandoned. Worthlessness and abandonment are separate and distinct concepts and are not, as urged by the Commissioner, simply two sides of the same coin--abandonment of the worthless property or abandonment of a property with worth.(16)

The per curiam opinion reiterated the necessary conditions for a finding of worthlessness.

Our opinion expressly holds that the test for worthlessness is a combination of subjective and objective indicia: a subjective determination by the taxpayer of the fact and the year of worthlessness to him, and the existence of objective factors reflecting completed transaction(s) and identifiable event(s) in the year in question--not limited, however, to transactions and events that rise to the level of divestiture of title or legal abandonment.(17)

The two alternative grounds for a loss deduction--abandonment and worthlessness--may allow a partner to select the year in which a partnership loss can be claimed. The IRS also brought this objection before the court in Echols. However, the court pointed out that worthlessness requires both a subjective determination of worthlessness, which is in the taxpayer's control, and some objective evidence of worthlessness, which is not within the taxpayer's control.

Even though the taxpayer cannot select the year in which the property becomes worthless, the opportunity to select the tax year for deducting the loss by holding a worthless property until the next tax year and then abandoning it does seem to exist. The per curiam opinion mentioned this possibility, but the court was more concerned that failure to have two separate grounds for the loss deduction could allow the IRS to refuse to ever allow a taxpayer's loss.

Thus, if an asset should become worthless in Year 1 but the taxpayer should take no steps to abandon it until Year 2, the inimical result of the commissioner's position would be a disallowed deduction in Year 1 for lack of abandonment and a disallowed deduction in Year 2 as well because the property first became worthless in Year 1--a classic Catch-22 position for taxpayers.(18)

Interestingly, the Fifth Circuit's opinion in Echols stated that if equity is the issue, neither the IRS nor the taxpayer should be allowed to use abandonment to manipulate the year in which a loss from worthlessness can be taken. The loss would have to be taken in the year of worthlessness regardless of when the abandonment occurred. If this dictum were followed, an abandonment loss could be claimed only if the taxpayer abandons a partnership interest that is not worthless.

Currently, decisions such as Tejon Ranch and Echols, along with Sec. 165(a), provide clear authorization for the deduction of a loss from the worthlessness of a partnership interest. Abandonment of a partnership interest also remains a separate but equally valid basis for claiming loss on withdrawal from a partnership.

Subchapter K and Abandonments

Abandonment of a partnership interest can occur for any number of reasons. Abandonment may seem the best course when there is extreme dissension among the partners or when a partner is deeply opposed to the direction in which the partnership business is heading. However, seldom will an abandonment occur if there is significant value in the partnership interest. In the typical abandonment situation, the partnership's assets have less value than the partnership's liabilities. Otherwise the partnership interest would be sold instead of abandoned.

Case law has established that in order for an abandonment to occur, there must be both an intent to abandon the property(19) and an affirmative act of

relinquishment of control of all incidents of ownership in the property.(20) The distinguishing difference between a sale and an abandonment of property is that there is no consideration received on the abandonment. If any consideration, however trivial, is actually received, the transaction is treated as a sale.(21) In the partnership setting, the statutory provisions of subchapter K mandate sale treatment when a partner is relieved of his share of partnership liabilities.

* Partnerships with recourse liabilities

For a long time there has been little doubt that the abandonment of a partnership interest in which the partner had a preabandonment share of the partnership's recourse liabilities resulted in a capital gain (or less commonly, a capital loss) being recognized by the partner. When a partner abandons his partnership interest, the remaining partners are considered to assume the departing partner's share of partnership debts for Sec. 752 purposes. Accordingly, the departing partner has a decrease in his share of partnership liabilities which, under Sec. 752, is considered a distribution of money by the partnership to the departing partner. If this deemed distribution exceeds the partner's predistribution basis, Sec. 731 mandates that the abandonment produces a capital gain; if the deemed distribution is less than the partner's predistribution basis, Sec. 731 mandates that the abandonment produces a capital loss. There is little room for equivocation with these results since no recent litigation was located involving abandonment of a partnership interest when recourse liabilities were owed by the partnership. This lack of litigation apparently means that both the IRS and taxpayers agree that a capital gain or loss is realized by the partner when such an abandonment occurs.(22)

Example 3: M, a general partner, abandons her interest in the MNO partnership when her basis is $120,000 and her share of partnership recourse liabilities is $110,000. When M abandon her partnership interest, under Sec. 752 she is no longer allocated a share of partnership liabilities and the shares of liabilities allocated to the other partners are increased. For M, this is a deemed distribution equal to the reduction in her share of recourse liabilities, $110,000. She must recognize a $10,000 loss ($120,000 basis -- the $1 10,000 deemed distribution). Under Sec. 73 1, the loss is treated as a loss from the sale of her partnership interest, which is a capital loss under Sec. 741.

There has been some discussion recently that no distribution should be deemed to occur when a partner is not relieved of his share of the partnership recourse liabilities under state law even though he disposes of his interest in the partnership. As discussed below, the Tax Court has stated clearly that Sec. 752, and not state law, controls when a partner is considered to be relieved of his share of partnership liabilities. The Tax Court also held that Sec. 752 mandates the deemed distribution on the departure of a partner from a partnership that has nonrecourse liabilities. While there seems to be little reason why Sec. 752 would not be equally applicable for departures from a partnership that has recourse liabilities, there is some lingering uncertainty of the tax result in this situation.

* Partnerships with nonrecourse liabilities

While Sec. 752(b) provides distribution treatment for any decrease in a partner's share of partnership liabilities, some taxpayers and practitioners have felt that distribution treatment should not be applied if a partnership interest was abandoned when the partnership interest shared in only nonrecourse debt. For example, the taxpayer in O'Brien(23) argued that under applicable state law he remained liable for partnership debt after his interest was abandoned so his share of partnership liabilities could not be said to have decreased with the abandonment. The Tax Court ruled otherwise and pointed out that since the debt involved was nonrecourse the taxpayer did not have personal liability either before or after the abandonment. Nevertheless, the court went on to say:

Petitioner's abandonment of his partnership interest resulted in a decrease in his share of the partnership liabilities within the meaning of section 752(b), not because he ever had personal liability under State law, but because he is no longer considered under the applicable Code provisions as sharing in the nonrecourse liabilities of the partnership.(24)

It is the interplay of Secs. 731, 741 and 752 that results in the sale or exchange treatment and Sec. 752 clearly deals with partnerships having both recourse and nonrecourse debt.

* Partnerships with no liabilities

The tax consequences of an abandonment of a partnership interest when the partnership had no liabilities were not certain before the Citron decision was handed down. Cases decided before the current scheme of partnership taxation was developed provided scant evidence of the result under current law,(25) and the Code, regulations, more recent court cases and revenue rulings failed to provide a precise answer.

In Citron, the Tax Court has provided the setting for clarification of this question. The court found that the two requirements for an abandonment were met: (1) Citron intended to abandon his interest and (2) he took an overt action to abandon it. Citron clearly expressed an intent to abandon his partnership interest when he informed the general partner that he would not contribute additional funds to the partnership and would not participate further as a partner. He took overt action to abandon his interest when he informed the general partner of his intentions and when he, together with the other limited partners, voted to dissolve the partnership.

However, a more interesting question remained for the court--the determination of the character of the abandonment loss in a situation in which the partnership had no liabilities. The IRS argued that the loss should be capital in nature and cited Rev. Rul. 76-189(26) to support its position. The revenue ruling dealt with the tax results that occur when a partnership termination takes place at a time when the partnership has no assets or liabilities. The Tax Court, however, refused to apply the deemed distribution treatment and resulting capital loss treatment outlined in Rev. Rul. 76-189. As a result, the court held that abandonment in a situation in which the partnership has no liabilities results in an ordinary loss under Sec. 165(a).

The Citron decision, while interesting, may have very little practical impact on abandonment of partnership interests. The typical partnership interest that an owner might consider abandoning is one with significant nonrecourse liabilities that may be in excess of the value of the assets. Citron provides no assistance in such a case. Accordingly, Citron will allow an ordinary loss to be reported only in those few situations in which either the partnership has no liabilities before the abandonment (e.g., when the partnership perhaps repaid its liabilities in order to obtain ordinary loss treatment) or when the partner did not share in the partnership liabilities (e.g., a limited partner in a partnership that has only recourse liabilities). Apparently even $1 of partnership liability will remove a situation from the Citron ordinary loss result.(27)

Rev. Rul. 76-189

A partnership terminates for tax purposes when no business, financial operation or venture of the partnership continues to be carried on by any of its partners in a partnership.(28) Generally, a termination that occurs under this rule results when the partnership sells assets to pay off liabilities and then distributes any remaining assets to the partners. Under the Sec. 731 and 752 rules, this transaction is taxed as a distribution of both the assets actually distributed and the deemed money distribution occurring from repayment of the partner's share of the partnership liabilities. Any gain or loss resulting from this distribution is treated as gain or loss from the sale or exchange of the partnership interest and is capital in nature.

However, if the partnership does not have liabilities or assets when the partnership terminates, there is no distribution and, accordingly, there is no obvious mechanism that triggers sale or exchange treatment. Using the familiar statutory outline of Secs. 731, 741 and 752, Rev. Rul. 76-189 considered how to report the termination of a partnership with no assets and no liabilities.

The revenue ruling considered a situation in which a taxpayer invests $15X in a partnership interest at the beginning of a tax year. He is allocated $8X of ordinary loss and $2X of Sec. 1231 loss for the tax year. At the end of the tax year, the partnership has no remaining assets or liabilities and terminates. Of course, there are no actual distributions, since the partnership has no assets, or deemed distributions, since the partnership has no liabilities.

In analyzing this fact situation, the Service cited the Sec. 731 distribution rules and the Sec. 741 sale or exchange rules, and asserted: "Where a partnership having no assets terminates without distributing property, the provisions of section 731 apply as if an actual distribution had taken place."(29) The ruling then concluded that the partner in this fact situation has a capital loss of $5X.

An argument based on this revenue ruling was advanced by the IRS in Citron to advocate the treatment of the abandonment loss as a capital loss, to which the Tax Court responded:

There are no cases which support this view and we treat respondent's rulings merely as the position of a party....

No rationale or support is provided in the ruling for the supposition deeming the existence of a distribution for purposes of section 731. In order to decide this case under the theory used by respondent in the ruling, we would be compelled to impute a sale or exchange, even though none had occurred. This we decline to do.(30) (Citations and footnote omitted.)

As the Citron court pointed out, there is no authority for the IRS's assertion that Sec. 731 applies when a partnership is terminated with no assets or liabilities. There is no Code or regulation provision that creates this deemed distribution and, further, the creation of this deemed distribution is not a product of case law. The Tax Court had no difficulty determining in Citron that the fictional distribution provision in Rev. Rul. 76-189 was not valid authority for the abandonment case.

The Citron denunciation of the basic premise of this revenue ruling, at the very least, leaves the ruling's holding in question. However, the question remains as to how a termination in these circumstances should be taxed. The appropriate treatment seems to be the same treatment that is accorded in cases of abandonment or worthlessness of an interest in a partnership that has no liabilities. There is no statute making the resultant loss a capital loss; by default, then, it must be an ordinary loss.

If partnership liabilities are paid close to the time the partnership terminates, the step-transaction doctrine may be used to include the deemed distribution as part of the termination event. This collapsing of the two parts of the transaction, of course, results in the partners reporting capital losses. There is significant flexibility as to when the partnership terminates because the timing of the termination is mandated by the Code to be the date when the partnership ceases to have any part of a business, financial operation or venture carried on by the partners in a partnership. However, the partnership terminates immediately if all partnership assets are sold or exchanged to pay all of the partnership liabilities. The termination can be delayed only by retaining some level of assets so that a business or financial operation is still being carried on by the partnership. If these retained assets expire or become worthless, then the setting is ripe for the partners to claim an ordinary loss on the termination of the partnership to the extent of their unrecovered basis in the partnership interest.

Conclusion

The only avenue open to the IRS to achieve capital loss treatment on the abandonment, worthlessness or termination of a partnership interest is to bring the transaction under the provisions of either Sec. 731 or Sec. 741. Sec. 752 serves this function if the partnership has liabilities that are part of the departing partner's basis and the partner is relieved of those liabilities under Sec. 752(b). Rev. Rul. 76-189 represents the Service's effort to create a deemed distribution even when the departing partner is not allocated a share of the partnership's liabilities. Obviously, at least one court has found this effort unacceptable.

Recent judicial decisions have made it clear that taxpayers have at least two alternatives for withdrawing from a partnership interest that will be reported under Sec. 165(a). Taxpayers may claim losses either by determining that the partnership interest is worthless or by abandoning the partnership interest (whether or not such interest is worthless). In both situations, the loss is a capital loss if the partner is released from a share of partnership liabilities. However, the loss apparently is an ordinary loss if the partner is not allocated a share of the partnership's liabilities immediately before his withdrawal. Further, the loss will be an ordinary loss if insolvency makes the partnership interest worthless while the partner is not relieved of his partnership liabilities. In the termination of a partnership with no assets or liabilities, any sustained loss would likewise be deductible by the partner. By analogy, it seems likely that this loss also might qualify for ordinary loss treatment. Clarification of this question by regulation, revenue ruling or court decision is clearly needed. (1) John C. Echols, 950 F2d 209 (5th Cir. 1991)(69 AFTR2d 92-433, 92-1 USTC 9150,046), per curiam, motion for rehearing 935 F2d 703 (5th Cir. 1991)(68 AFTR2d 91-5157, 91-2 USTC [paragraph] 50,360), rev'g and rem'g 93 TC 553 (1989), denied. (2) B. Philip Citron, 97 TC 200 (1991). (3) Rev. Rul. 76-189, 1976-1 CB 181. (4) In Lester J. Arkin, 76 TC 1048 (198 1) (abandonment of an interest in a land trust), and Eugene L. Freeland, 74 TC 970 (1980) (abandonment by a partnership of real property subject to an encumbrance), an abandonment under state law was considered a sale or exchange for Federal income tax purposes. Note that neither case dealt with an abandonment of a partnership interest and therefore neither involved the Sec. 731, 741 or 752 statutory scheme. (5) An ordinary loss might result when the departing partner had a limited interest in a partnership that had only recourse liabilities. In such a situation, the limited partner would not be allocated a portion of the partnership's recourse liabilities and no release from such liabilities would result on abandonment of the interest. (6) Audrey L. Zeeman, 275 F Supp 235 (S.D. N.Y. 1967)(21 AFTR2d 679, 67-2 USTC [paragraph] 9565) (7) Id., at 67-2 USTC 84,821. (8) Tejon Ranch Co. and Subsidiaries, TC Memo 1985-207. (9) In Re James D. Kreidle, Debtor, Bankr. Ct., Colo., 1991 (91-2 USTC [paragraph] 50,371). (10) Id., at 91-2 USTC 89,324. (11) It is interesting that the first two cases in this line, Zeeman, note 6, and Tejon Ranch, note 8, both allowed the partner to deduct the original capital contribution with no discussion of whether some of the capital may have already been recovered through loss deductions. In the third case, Kreidle, note 9, the loss deduction was set equal to the basis with no discussion of whether the basis amount also included the partner's interest in any liabilities. There is clearly a need for a more precise statement of the amount of the worthlessness loss in a situation in which insolvency causes the worthlessness. (12) Rev. Rul. 70-355, 1970-2 CB 51. (13) Rev. Rul. 54-581, 1954-2 CB 112, at 113. (14) Morris W. Finley, TC Memo 1974-229. (15) Id., at 74-947, quoting Emmett J. McCarthy, 129 F2d 84 (7th Cir. 1942)(29 AFTR 786, 42-2 USTC [paragraph] 9586), at 42-2 USTC 10,367. (16) Echols, note 1, 950 F2d 209, at 92-1 USTC 83,190. (17) Id., at 92-1 USTC 83,192. (18) Id. (19) Talache Mines, Inc., 218 F2d 491 (9th Cir. 1954)(46 AFTR 1495, 55-1 USTC [paragraph] 9163). (20) Albert G. Boesel, TC Memo 1952-284. (21) Thomas Stokes, 124 F2d 335 (3d Cir. 1941)(28 AFTR 656, 41-2 USTC [paragraph] 9770). (22) See, however, the dissenting opinion in Citron, note 2, regarding whether Citron was relieved of a debt to the partnership because, contrary to the partnership agreement, it had paid interest on a personal loan he took out to purchase the partnership interest. (23) Neil J. O'Brien, 77 TC 113 (198 1). (24) Id., at 118. (25) In Gaius G. Gannon, 16 TC 1134 (1951), and Palmer Hutcheson, 17 TC 14 (1951), acq. to both decisions 1951-2 CB 2, which considered abandonments of partnership interests, the court determined that each resulted in an ordinary loss. (26) Rev. Rul. 76-189, note 3. (27) Citron, note 2, at 216, n. 14. (28) Sec. 708(b)(1)(a). (29) Rev. Rul. 76-189, note 3, at 182. (30) Citron, note 2, at 216.