26 U.S.C. § 723 — Basis of property contributed to partner-

Page 1875 TITLE 26—INTERNAL REVENUE CODE § 724 AMENDMENTS 1997—Subsec. (c). Pub. L. 105–34, § 1131(b)(3), added subsec. (c). Subsec. (d). Pub. L. 105–34, § 1131(b)(5)(B), added sub- sec. (d). 1976—Pub. L. 94–455 designated existing provisions as subsec. (a), added subsec. (a) heading ‘‘General rule’’, and added subsec. (b). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–455, title XXI, § 2131(f)(3)–(5), Oct. 4, 1976, 90 Stat. 1924, 1925, provided that: ‘‘(3) Except as provided in paragraph (4), the amend- ments made by subsections (b) and (c) [amending this section and sections 722 and 723 of this title] shall apply to transfers made after February 17, 1976, in taxable years ending after such date. ‘‘(4) The amendments made by subsections (b) and (c) shall not apply to transfers to a partnership made on or before the 90th day after the date of the enactment of this Act [Oct. 4, 1976] if— ‘‘(A) either— ‘‘(i) a ruling request with respect to such trans- fers was filed with the Internal Revenue Service be- fore March 27, 1976, or ‘‘(ii) a registration statement with respect to such transfers was filed with the Securities and Ex- change Commission before March 27, 1976, ‘‘(B) the securities transferred were deposited on or before the 60th day after the date of the enactment of this Act [Oct. 4, 1976], and ‘‘(C) either— ‘‘(i) the aggregate value (determined as of the close of the 60th day referred to in subparagraph (B), or, if earlier, the close of the deposit period) of the securities so transferred does not exceed $100,000,000, or ‘‘(ii) the securities transferred were all on deposit on February 29, 1976, pursuant to a registration statement referred to in subparagraph (A)(ii). ‘‘(5) If no registration statement was required to be filed with the Securities and Exchange Commission with respect to the transfer of securities to any part- nership, then paragraph (4) shall be applied to such transfers— ‘‘(A) as if paragraph (4) did not contain subpara- graph (A)(ii) thereof, and ‘‘(B) by substituting ‘$25,000,000’ for ‘$100,000,000’ in subparagraph (C)(i) thereof.’’ § 722. Basis of contributing partner’s interest The basis of an interest in a partnership ac- quired by a contribution of property, including money, to the partnership shall be the amount of such money and the adjusted basis of such property to the contributing partner at the time of the contribution increased by the amount (if any) of gain recognized under section 721(b) to the contributing partner at such time. (Aug. 16, 1954, ch. 736, 68A Stat. 245; Pub. L. 94–455, title XXI, § 2131(c), Oct. 4, 1976, 90 Stat. 1924; Pub. L. 98–369, div. A, title VII, § 722(f)(1), July 18, 1984, 98 Stat. 974.) Editorial Notes AMENDMENTS 1984—Pub. L. 98–369 inserted ‘‘under section 721(b)’’ after ‘‘gain recognized’’. 1976—Pub. L. 94–455 inserted ‘‘increased by the amount (if any) of gain recognized to the contributing partner at such time’’ after ‘‘at the time of the con- tribution’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 98–369, div. A, title VII, § 722(f)(2), July 18, 1984, 98 Stat. 974, provided that: ‘‘The amendments made by paragraph (1) [amending this section and sec- tion 723 of this title] shall take effect as if included in the amendments made by section 2131 of the Tax Re- form Act of 1976 [Pub. L. 94–455].’’ EFFECTIVE DATE OF 1976 AMENDMENT For effective date of amendment made by Pub. L. 94–455, see section 2131(f)(3)–(5) of Pub. L. 94–455, set out as a note under section 721 of this title. § 723. Basis of property contributed to partner- ship The basis of property contributed to a partner- ship by a partner shall be the adjusted basis of such property to the contributing partner at the time of the contribution increased by the amount (if any) of gain recognized under section 721(b) to the contributing partner at such time. (Aug. 16, 1954, ch. 736, 68A Stat. 245; Pub. L. 94–455, title XXI, § 2131(c), Oct. 4, 1976, 90 Stat. 1924; Pub. L. 98–369, div. A, title VII, § 722(f)(1), July 18, 1984, 98 Stat. 974.) Editorial Notes AMENDMENTS 1984—Pub. L. 98–369 inserted ‘‘under section 721(b)’’ after ‘‘gain recognized’’. 1976—Pub. L. 94–455 inserted ‘‘increased by the amount (if any) of gain recognized to the contributing partner at such time’’ after ‘‘at the time of the con- tribution’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 effective as if included in amendments made by section 2131 of the Tax Reform Act of 1976, Pub. L. 94–455, see section 722(f)(2) of Pub. L. 98–369, set out as a note under section 722 of this title. EFFECTIVE DATE OF 1976 AMENDMENT For effective date of amendment made by Pub. L. 94–455, see section 2131(f)(3)–(5) of Pub. L. 94–455, set out as a note under section 721 of this title. § 724. Character of gain or loss on contributed unrealized receivables, inventory items, and capital loss property (a) Contributions of unrealized receivables In the case of any property which— (1) was contributed to the partnership by a partner, and (2) was an unrealized receivable in the hands of such partner immediately before such con- tribution, any gain or loss recognized by the partnership on the disposition of such property shall be treated as ordinary income or ordinary loss, as the case may be. (b) Contributions of inventory items In the case of any property which— (1) was contributed to the partnership by a partner, and (2) was an inventory item in the hands of such partner immediately before such con- tribution,