Actual or deemed cash distributions in excess of a partner's outside basis are generally taxable as capital gains.

Name: Actual or deemed cash distributions in excess of a partner's outside basis are generally taxable as capital gains.
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When actual or deemed cash distributions (such as those made as part of a liquidating distribution) exceed a partner's outside basis in the partnership, the excess amount is generally treated as a capital gain for tax purposes.

Actual or Deemed Cash Distributions in Excess of a Partner's