In a recent article published by Tax Notes, tax associate Bob Kane (Boston) examines Pope & Talbot and argues that the IRS has inappropriately relied on that case in two rulings addressing the calculation of section 311 gain on distributions of partnership equity. He writes:
“A tax adviser who performs a cursory reading of section 311 might conclude that the section 311 gain on a distribution of partnership equity is calculated based on the fair market value of the partnership equity and the corporation’s basis in the partnership equity. However, rulings issued by the IRS applying Pope & Talbot have reached a different conclusion, creating doubt about how the section 311 gain is calculated on a distribution of partnership equity.”
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