Contribution of a Built-In Loss to a Partnership
8 Pages Posted: 8 Aug 2012 Last revised: 19 Aug 2012
Date Written: July 30, 2012
Abstract
In 2004, Congress amended the Code to prevent the use of a partnership entity as a means of transferring the potential deduction for a built-in loss from one person to another. The amendment was poorly designed in such manner that it often distorts the reporting of taxable income. Moreover, the amendment has undermined the application of the remedial method and the traditional method with curative allocations to a contribution of a built-in loss.
Keywords: built-in loss, partnership taxation, contributing partner, contributed property, remedial method
JEL Classification: K34
Suggested Citation: Suggested Citation