Reassessing the Administration's Proposals for Reform of Subchapter K

10 Pages Posted: 15 May 2000 Last revised: 12 Sep 2015

See all articles by Karen C. Burke

Karen C. Burke

University of Florida Levin College of Law

Abstract

This article reexamines the Clinton administration's recent proposal to treat certain partnership distributions as a partial liquidation. It argues that the crucial defect inherent in the administration's proposal can be easily remedied by refining the definition of a partial liquidation. A refined partial liquidation rule coupled with mandatory basis adjustments offers a means of preventing shifting of built-in gain (or loss) while permitting simplified partnership accounting following a nonprorata distribution. By contrast, the administration's critics have advocated an expanded version of remedial special allocations. This alternative approach, if perceived as a serious solution to the underlying problem, would raise significant technical and policy concerns. The shortcomings of the administration's proposal should not furnish a pretext for blocking needed reform of Subchapter K.

Keywords: partnership, remedial allocations, partial liquidation, basis adjustments

JEL Classification: K34

Suggested Citation

Burke, Karen C., Reassessing the Administration's Proposals for Reform of Subchapter K. Tax Notes, Vol. 86, p. 1423, 2000, Available at SSRN: https://ssrn.com/abstract=224144

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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