Taxing Hot Asset Sales

38 Pages Posted: 19 Aug 2008

See all articles by Karen C. Burke

Karen C. Burke

University of Florida Levin College of Law


The Article comments on I.R.S. Notice 2006-14 which proposes to simplify and rationalize the collapsible partnership rules of section 751(b). It concludes that the proposed hot asset sale approach represents much needed improvement of section 751(b) but suggests that the Treasury should also consider more fundamental reform that would treat a nonprorata current distribution as a partial liquidation. The Article also explores the relationship between sections 734(b) and 751(b), focusing on the 1954 ALI proposals and Professor Andrews' more recent proposals concerning hot asset distributions and mandatory basis adjustments. The Article is an outgrowth of the author's work as a member of the ABA taskforce on section 751(b).

Keywords: partnership, 751, 734, 704(c), hot asset sale, Notice 2006-14, ordinary income, collapsible, basis adjustments, remedial allocations

JEL Classification: K34

Suggested Citation

Burke, Karen C., Taxing Hot Asset Sales. Florida Tax Review, Vol. 8, No. 3, 2007, San Diego Legal Studies Paper No. 08-073, Available at SSRN:

Karen C. Burke (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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