As you probably know, a taxpayer realizes gain when the taxpayer transfers appreciated property in exchange for other property. There are exceptions to this general rule. One of those exceptions is defined in Internal Revenue Code Section 721. Section 721 governs when a taxpayer contributes property to a partnership in exchange for a partnership interest. As usual in tax law, this exception is defined to eliminate transactions that don’t fit the intent of the provision. As a consequence, some taxpayers will realize gain when they contribute property to a partnership in exchange for a partnership interest.
Posts tagged Section 721(c) Partnerships.