Final Section 731(c) Regulations on distributions of marketable securities favor taxpayers

Article Abstract:

Section 731(c) of the Final Regulations has made dramatic changes in the way marketable securities are perceived. The new rule, which the Internal Revenue Service adopted in Dec 1996, provides that a partner may recognize gain if the value of distributed securities overshoots the adjusted basis of partnership interest. The rule also specifies that marketable securities must be treated in the context of fair market value relative to the distribution date. Moreover, under the said rule, readily exchangeable instruments, common trust funds or open-end mutual fund shares and actively traded precious metals must be considered marketable securities.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Securities & Commodities Regulatn, Evaluation, Financial instruments, United States. Internal Revenue Service

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Proposed regulations clarify rules on distributions of marketable securities

Article Abstract:

The Uruguay Round Agreements Act has added a proposed regulation on the distribution of marketable securities in the case of the distribution of property of a partnership. Marketable securities are treated the same way as money with a few exceptions. Section 731(c) limits the possibility of tax deferral for partners receiving a distribution of marketable securities. It does not require the partnership to recognize a gain on the distribution of marketable securities.

Investment Banking and Securities Dealing, Security and Commodity Services, Securities Services, Interpretation and construction, Tax law, Securities law

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Final Section 731(c) Regulations on Distributions of Marketable Securities Favor Taxpayers

Article Abstract:

This article analyses the tax deferral of a partner's share at fair market value in a distribution of marketable securities as money as limited by Section 731(c), when such distributions result from a merger, division of a partnership or exchanges.

United States, Analysis, Taxation, Securities, Tax shelters, Securities taxes

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