103 STAT. 2380 PUBLIC LAW 101-239—DEC. 19, 1989 "(c) CONTRIBUTED PROPERTY. — "(1) IN GENERAL.— Under regulations prescribed by the Sec- retary— "(A) income, gain, loss, and deduction with respect to property contributed to the partnership by a partner shall '*^^' be shared among the partners so as to take account of the .,, variation between the basis of the property to the partner- ship and its fair market value at the time of contribution, and "(B) if any property so contributed is distributed by the partnership (other than to the contributing partner) within ^, 5 years of being contributed— ' '*^ "(i) the contributing partner shall be treated as rec- ognizing gain or loss (as the case may be) from the sale ,/ of such property in an amount equal to the gain or loss ** which would have been allocated to such partner under subparagraph (A) by reason of the variation described in subparagraph (A) if the property had been sold at its fair market value at the time of the distribution, "(ii) the character of such gain or loss shall be deter- mined by reference to the character of the gain or loss which would have resulted if such property had been
sold by the partnership to the distributee, and "(iii) appropriate adjustments shall be made to the adjusted basis of the contributing partner's interest in the partnership and to the adjusted basis of the prop- erty distributed to reflect any geiin or loss recognized under this subparagraph. , "(2) SPECIAL RULE FOR DISTRIBUTIONS WHERE GAIN OR LOSS WOULD NOT BE RECOGNIZED OUTSIDE PARTNERSHIPS.— Under regu- lations prescribed by the Secretary, if— "(A) property contributed by a partner (hereinafter re- ferred to as the 'contributing partner') is distributed by the partnership to another partner, and "(B) other property of a like kind (within the meaning of section 1031) is distributed by the partnership to the contributing partner not later than the earlier of— "(i) the 180th day after the date of the distribution described in subparagraph (A), or "(ii) the due date (determined with regard to exten- sions) for the contributing partner's return of the tax imposed by this chapter for the taxable year in which the distribution described in subparagraph (A) occurs, then to the extent of the value of the property described in subparagraph (B), paragraph (I)(B) shall be applied as if the contributing partner had contributed to the partnership the property described in subparagraph (B). "(3) OTHER RULES.—Under regulations prescribed by the Sec- retary, rules similar to the rules of paragraph (1) shall apply to contributions by a partner (using the cash receipts and disburse- ments method of accounting) of accounts payable and other accrued but unpaid items. Any reference in paragraph (1) or (2) to the contributing partner shall be treated as including a reference to any successor of such partner."
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