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    Created by Michael Wessels
    1. U.S. Code
    2. Title 26
    3. Subtitle A
    4. CHAPTER 1
    5. Subchapter K
    6. PART II
    7. Subpart A

    § 724 Character of gain or loss on contributed unrealized receivables, inventory items, and capital loss property

    (a) Contributions of unrealized receivables

    In the case of any property which—

    (1) was contributed to the partnership by a partner, and

    (2) was an unrealized receivable in the hands of such partner immediately before such contribution,

    (b) Contributions of inventory items

    In the case of any property which—

    (1) was contributed to the partnership by a partner, and

    (2) was an inventory item in the hands of such partner immediately before such contribution,

    (c) Contributions of capital loss property

    In the case of any property which—

    (1) was contributed by a partner to the partnership, and

    (2) was a capital asset in the hands of such partner immediately before such contribution,

    (d) Definitions

    For purposes of this section—

    (1) Unrealized receivable

    The term “unrealized receivable” has the meaning given such term by (determined by treating any reference to the partnership as referring to the partner).

    (2) Inventory item

    The term “inventory item” has the meaning given such term by (determined by treating any reference to the partnership as referring to the partner and by applying section 1231 without regard to any holding period therein provided).

    (3) Substituted basis property

    (A) In general

    If any property described in subsection (a), (b), or (c) is disposed of in a nonrecognition transaction, the tax treatment which applies to such property under such subsection shall also apply to any substituted basis property resulting from such transaction. A similar rule shall also apply in the case of a series of non-recognition transactions.

    (B) Exception for stock in C corporation

    Subparagraph (A) shall not apply to any stock in a C corporation received in an exchange described in section 351.