Page:United States Statutes at Large Volume 68A.djvu/290

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INTERNAL REVENUE CODE OF 1954

Subpart D—Provisions Common to Other Subparts Sec. Sec. Sec. Sec.

751. 752. 753. 754.

Unrealized receivables and inventory items. Treatment of certain liabilities. Partner receiving income in respect of decedent. Manner of electing optional adjustment to basis of partnership property. Sec. 755. Rules for allocation of basis. SEC. 751. UNREALIZED RECEIVABLES AND INVENTORY ITEMS. (a) SALE OR EXCHANGE OF INTEREST IN PARTNERSHIP.—The

amount of any money, or the fair market vahie of any property, received by a transferor partner in exchange for all or a part of his interest in the partnership attributable to— (1) unrealized receivables of the partnership, or (2) inventory items of the partnership which have appreciated substantially in value, shall be considered as an amount realized from the sale or exchange of property other than a capital asset. (b) CERTAIN DISTRIBUTIONS TREATED AS SALES OR EXCHANGES.— (1) GENERAL RULE.—To the extent a partner receives in a dis-

tribution— (A) partnership property described in subsection (a)(1) or (2) in exchange for all or a part of his interest in other partnership property (including money), or (B) partnership property (including money) other than property described in subsection (a)(1) or (2) in exchange for all or a part of his interest in partnership property described in subsection (a)(1) or (2), such transactions shall, under regulations prescribed by the Secretary or his delegate, be considered as a sale or exchange of such property between the distributee and the partnership (as constir tuted after the distribution). (2) EXCEPTIONS.—Paragraph (1) shall not apply to— (A) a distribution of property which the distributee contributed to the partnership, or. (B) payments, described in section 736(a), to a retiring partner or successor in interest of a deceased partner. (c) UNREALIZED RECEIVABLES.—For purposes of this subchapter, the term "unrealized receivables" includes, to the extent not previously includible in income under the method of accounting used by the partnership, any rights (contractual or otherwise) to payment for— (1) goods delivered, or to be delivered, to the extent the proceeds therefrom would be treated as amounts received from the sale or exchange of property other than a capital asset, or (2) services rendered, or to be rendered. (d) INVENTORY ITEMS W H I C H H A V E APPRECIATED SUBSTANTIALLY IN V A L U E. — (1) SUBSTANTIAL APPRECIATION.—Inventory items of the part-

nership shall be considered to have appreciated substantially in value if their fair market value exceeds— (A) 120 percent of the adjusted basis to the partnership of such property, and

§751

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