Proportionate liquidating distributions of noncash partnership assets cannot result in recognized gain, but may result in the recipient partner recognizing loss.

Question

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According to IRS rules, when a partner receives a proportionate liquidating distribution of noncash partnership assets, there cannot be any recognized gain. However, the partner may recognize a loss if the fair market value of the assets received is less than their adjusted basis in the partnership interest.

Proportionate Liquidating Distributions of Noncash Partnership Assets Cannot Result in Recognized