PUBLIC LAW 103-465—DEC. 8, 1994 108 STAT. 5009 "(i) their basis determiiied under section 732, increased by
- (ii) the amount of such gain.
" (B) ALLOCATION OF BASIS INCREASE. — Any increase in basis attributable to the gain described in subparagraph (A)(ii) shall be allocated to marketable securities in proportion to their respective amounts of unrealized appreciation before such increase. "(5) SUBSECTION DISREGARDED IN DETERMINING BASIS OF PARTNER'S INTEREST IN PARTNERSHIP AND OF BASIS OF PARTNER- SHIP PROPERTY. — Sections 733 and 734 shall be applied as if no gain were recognized, and no adjustment were made to the basis of property, under this subsection. "(6) CHARACTER OF GAIN RECOGNIZED.— In the case of a distribution of a marketable security which is an unrealized receivable (as defined in section 751(c)) or an inventory item (as defined in section 751(d)(2)), any gain recognized under this subsection shall be treated as ordinary income to the extent of any increase in the basis of such seciuity attributable to the gain described in paragraph (4)(A)(ii). "(7) REGULATIONS.— The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations to prevent the avoidance of such purposes." (b) CONFORMING AMENDMENTS.— (1) The last sentence of section 737(c)(1) is amended to 26 USC 737. read as follows: "For purposes of determining the basis of the distributed property (other than monev), such increase shaM be treated as occurring immediately before the distribution." (2) Section 737 is amended by aading at the end the following new subsection: " (e) MARKETABLE SECURITIES TREATED AS MONEY. — "For treatment of:inarketable seciirities as money for purposes of this section, see section TSKc)." (c) EFFECTIVE DATE. — 26 USC 73i note. (1) IN GENERAL. —Except as otherwise provided in this subsection, the amendments made by this section shall apply to distributions after the date of the enactment of this Act (2) CERTAIN DISTRIBUTIONS BEFORE JANUARY i, 1995.—The amendments made by this section shall not apply to any marketable security distributed before Jsinuary 1, 1995, by the partnership which held such security on July 27, 1994. (3) DISTRIBUTIONS IN UQUIDATION OF PARTNER'S INTEREST.—The amendments made by this section shall not apply to the distribution of a marketable security in Uquidation of a partner's interest in a partnership if— (A) such liquidation is pursuant to a written contract which was binding on July 15, 1994, and at all times thereafter before the distribution, and (B) such contract provides for the purchase of such interest not later than a date certain for— (i) a fixed value of marketable securities that are specified in the contract, or (ii) other property. The preceding sentence shall not apply if the partner has the right to elect that such distribution be made other than in marketable securities.
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