The Effect of Like-Kind Property on the Section 704(c) Anti-Mixing Bowl Rules

Tax Management Real Estate Journal, Vol. 27, p. 131, March 2011

Brooklyn Law School, Legal Studies Paper No. 226

11 Pages Posted: 28 Mar 2011 Last revised: 28 Jun 2011

Bradley T. Borden

Brooklyn Law School

Douglas L. Longhofer

Ernst & Young LLP - Washington, D.C. Office

Date Written: March 24, 2011

Abstract

Section 704(c)(2) provides an exception to the section 704(c)(1)(B) anti-mixing bowl rules. Commentators have observed that the section 704(c)(2) regulations appear to reach a result that is different from the one intended by the language of the statute. This article take a close look at the language of section 704(c)(2) and suggests that it is subject to multiple interpretations. Of those multiple interpretations, one that requires the partners to recast their original transaction to account for the basis of distributed like-kind property is the most reasonable. The results obtained using that interpretation are identical to the results in the section 704(c)(2) regulations. Thus, the article concludes that commentary on those regulations is generally incorrect.

Keywords: like-kind property, partnership distribution, anti-mixing-bowl rules, section 704(c)

Suggested Citation

Borden, Bradley T. and Longhofer, Douglas L., The Effect of Like-Kind Property on the Section 704(c) Anti-Mixing Bowl Rules (March 24, 2011). Tax Management Real Estate Journal, Vol. 27, p. 131, March 2011; Brooklyn Law School, Legal Studies Paper No. 226. Available at SSRN: https://ssrn.com/abstract=1794225

Bradley T. Borden (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

Douglas L. Longhofer

Ernst & Young LLP - Washington, D.C. Office ( email )

1225 Connecticut Avenue NW
Washington, DC 20036
United States

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