26 U.S.C. § 752

Treatment of certain liabilities

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(a) Increase in partner’s liabilities

Any increase in a partner’s share of the liabilities of a partnership, or any increase in a partner’s individual liabilities by reason of the assumption by such partner of partnership liabilities, shall be considered as a contribution of money by such partner to the partnership.

(b) Decrease in partner’s liabilities

Any decrease in a partner’s share of the liabilities of a partnership, or any decrease in a partner’s individual liabilities by reason of the assumption by the partnership of such individual liabilities, shall be considered as a distribution of money to the partner by the partnership.

For purposes of this section, a liability to which property is subject shall, to the extent of the fair market value of such property, be considered as a liability of the owner of the property.

(d) Sale or exchange of an interest

In the case of a sale or exchange of an interest in a partnership, liabilities shall be treated in the same manner as liabilities in connection with the sale or exchange of property not associated with partnerships.

(Aug. 16, 1954, ch. 736, 68A Stat. 251.)Statutory Notes and Related SubsidiariesOverruling of Raphan Case

Pub. L. 98–369, div. A, title I, § 79, July 18, 1984, 98 Stat. 597, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:“(a)General Rule.—Section 752 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (and the regulations prescribed thereunder) shall be applied without regard to the result reached in the case of Raphan vs the United States, 3 Cl. Ct. 457 (1983).“(b)Regulations.—In amending the regulations prescribed under section 752 of such Code to reflect subsection (a), the Secretary of the Treasury or his delegate shall prescribe regulations relating to liabilities, including the treatment of guarantees, assumptions, indemnity agreements, and similar arrangements.”

Notes of Decisions

Cited in 38 cases, 1931–2018 · leading case: Comm'r v. Tufts, 461 U.S. 300 (1983).

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Comm'r v. Tufts, 461 U.S. 300 (1983). · cites it 4× “§ 752 (d), specifically provides that liabilities involved in the sale or exchange of a partnership interest are to "be treated in the same manner as liabilities in connection with the sale or exchange of property not associated with partnerships." Section 1001 governs the…”

Stobie Creek Investments LLC v. United States, 608 F.3d 1366 (Fed. Cir. 2010). · cites it 2× “Under the J & G strategy, the short option’s contribution has no effect on the taxpayer’s basis because it is not treated as a “liability” under 26 U.S.C. § 752 when calculating the taxpayer’s basis in his partnership interest.”

Klamath Strategic Inv. Fund Ex Rel. St. Croix Ventures v. United States, 568 F.3d 537 (5th Cir. 2009). · cites it 2× “2 The IRS disagreed with this basis calculation, and in 2004 issued Final Partnership Administrative Adjustments (“FPAAs”) to Klamath and Kinabalu stating that under 26 U.S.C. § 752 of the Internal Revenue Code (the “Code”), the partners should have treated the entire $66.”

Southgate Master Fund, L.L.C. Ex Rel. Montgomery Capital Advisors, LLC v. United States, 659 F.3d 466 (5th Cir. 2011). · cites it 2× “See 26 U.S.C. § 752 (b). However, Martel had distributed the proceeds of the loan to Beal in exchange for Beal's agreeing to personally and unconditionally guarantee the loan, and the district court found that Beal was at risk on the guarantee, see generally 26 C.”

Stephen Babin Betty Boehm Babin v. Comm'r of Internal Revenue, 23 F.3d 1032 (6th Cir. 1994). · cites it 3× “Moreover, as noted by petitioner, the discharge in partnership liabilities not only generates discharge of indebtedness income but also results in a deemed distribution of money under 26 U.S.C. § 752 (b) dn the amount of the partner’s share of the discharged liabilities, which…”

Jade Trading, LLC v. United States, 65 Fed. Cl. 487 (Fed. Cl. 2005). · cites it 5× “701-2; (2) IRS’ internal interpretation of the term “liabilities” in 26 U.S.C. § 752 reflected in documents underlying the issuance of IRS Notice 2000-44; and (3) documents in Plaintiffs’ Administrative Files.”

Crc Corp. v. Comm'r of Internal Revenue. Crc Corp. v. Comm'r of Internal Revenue, 693 F.2d 281 (3rd Cir. 1982). · cites it 2× “26 U.S.C. §§ 705 , 722 (1976). Another provision of the Code states that “[a]ny increase in a partner’s share of the liabilities of a partnership .”

Marriott Int'l Resorts, L.P. v. United States, 61 Fed. Cl. 411 (Fed. Cl. 2004). · cites it 3× “4 Marriott filed suit in this Court in April 2001, challenging the IRS’s determination in the Adjustment and averring that the short-sale transactions gave rise to a “contingent” rather than a “fixed” obligation that should not be considered a “liability” for purposes of…”

Am. Boat Co., LLC v. United States, 583 F.3d 471 (7th Cir. 2009). “See 26 U.S.C. § 752 . The result was a drastic artificial increase in the basis that permitted Jump and his entities to claim much higher deductions for the depreciation of the towboats and to offset taxable gains earned by later sales of some of the boats.”

Sala v. United States, 552 F. Supp. 2d 1167 (D. Colo. 2008). · cites it 3× “752-6 Under 26 U.S.C. § 752 , a partner’s adjusted basis in a partnership is determined by a partner’s contribution to the partnership.”

Ernest J. Saviano & Margaret Saviano v. Comm'r of Internal Revenue, 765 F.2d 643 (7th Cir. 1985). “The court determined that nonrecourse loans were too contingent to be classified as a liability of the partnership for purposes of 26 U.S.C. § 752 . Thus, the taxpayers’ deductions were limited to that portion represented by their actual contributions to the partnership.”

Marriott Int'l Resorts, L.P., & Marriott Int'l Jbs Corp. v. United States, 437 F.3d 1302 (Fed. Cir. 2006). “(Marriott) requested production of all documents that the Internal Revenue Service (IRS or Agency) relied upon in defining “liability” under 26 U.S.C. § 752 . See id. at 414 . Marriott alleges the Agency’s pre-1995 interpretation of § 752 justified its treatment of various…”

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— 26 U.S.C. § 752(c) — 1 case

Long v. United States, 451 F. Supp. 1009 (W.D. Tex. 1976).

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