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John O. Everett, Ph.D., CPA
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Contemporary Tax Practice
Tax Tutorial Module 1 — Partnership Taxation

Topic 7: Sale of a Partnership Interest
[IRS Materials: Publication 541]

B. Sale of a Partnership Interest Without Sec. 751 Properties

1. Generally, gain on the sale of a partnership interest is capital gain, unless Sec. 751. properties (described below) are present.

2. Remember – When the partner sells his or her interest, generally the purchaser steps in the shoes of the seller and assumes his or her share of the partnership liabilities. For that reason, be sure to remember that the seller’s share of the liabilities is always included in the amount realized on the sale. (This is also necessary for symmetry, since such liabilities are also included in the partner’s basis of the partnership interest.)

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