More on Collapsible Real Estate Partnerships

4 Pages Posted: 19 Sep 2008

See all articles by Karen C. Burke

Karen C. Burke

University of Florida Levin College of Law

Multiple version iconThere are 2 versions of this paper

Date Written: September 18, 2008

Abstract

The commentary explains the operation of the section 1(h)(6)(B) limitation on gain taxed at 25% when a partner's only capital gain for the year consists of unrecaptured section 1250 gain on sale of a partnership interest. As clarified by the preamble to the final regulations, the section 1(h)(6)(B) limitation should be irrelevant in this situation, so that the selling partner's entire unrecaptured section 1250 gain is taxed at 25% (rather than the 15% rate for residual capital gain). While the preamble should dispel any confusion concerning the proper operation of the section 1(h)(6)(B) limitation under existing law, the problem would not arise if the character of section 1231 gain were preserved under the look-through rules applicable to sales of partnership interests.

Keywords: partnership, real estate, capital gain, sale of interest, redemption, basis adjustment, 751, 1(h)

JEL Classification: K34

Suggested Citation

Burke, Karen C., More on Collapsible Real Estate Partnerships (September 18, 2008). San Diego Legal Studies Paper No. 08-074, Available at SSRN: https://ssrn.com/abstract=1270223 or http://dx.doi.org/10.2139/ssrn.1270223

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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