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Contribution of a Built-In Loss to a Partnership

8 Pages Posted: 8 Aug 2012 Last revised: 19 Aug 2012

Douglas A. Kahn

University of Michigan Law School

Date Written: July 30, 2012


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

Kahn, Douglas A., Contribution of a Built-In Loss to a Partnership (July 30, 2012). Tax Notes, Vol. 136, No. 5, 2012; U of Michigan Law & Econ Research Paper, No. 12-015 . Available at SSRN:

Douglas A. Kahn (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4043 (Phone)

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