The purpose of hot asset rules is to ensure that selling partners recognize all gain or loss on the sale of their partnership interests as capital.

Question

Quizplus · Accepted Answer

The purpose of hot asset rules is to ensure that certain types of assets (such as inventory and unrealized receivables) are treated as ordinary income, rather than capital gains, when a partnership interest is sold, to prevent the conversion of ordinary income into capital gains.

The Purpose of Hot Asset Rules Is to Ensure That