A Few Partnership Questions

[BobKamman]

This is why I don't do 1065's.

1. Is a deemed distribution of a partnership interest in an assets-over merger of two partnerships under § 1.708-1(c)(3)(i) of the Income Tax Regulations (“regulations”) treated as an “exchange” pursuant to § 761(e) of the Internal Revenue Code (“Code”) that requires a mandatory downward inside-basis adjustment under § 743(b) when the resulting partnership has a substantial built-in loss?

2. If so, to what extent are the resulting partnership’s liabilities included in calculating a transferee partner’s adjusted basis in the transferred partnership interest and a transferee partner’s share of adjusted basis to the partnership of the resulting partnership’s property for purposes of § 1.743-1(c) and (d)(1)?

3. Is cancellation of indebtedness (“COD”) income that is deferred under § 108(i) included in calculating a transferee partner’s share of adjusted basis to the partnership of partnership property for purposes of § 1.743-1(d)(1)?

Why do I ask?  Well, it came up in the news this morning.  Along with a photo of the building where I worked three years while in college.  Except it had the names of two newspapers on it, back then. 

https://www.nytimes.com/2024/05/11/us/trump-taxes-audit-chicago.html