The basis of partnership property shall not be adjusted as the result of a distribution of property to a partner unless the election, provided in section 754 (relating to optional adjustment to basis of partnership property), is in effect with respect to such partnership or unless there is a substantial basis reduction with respect to such distribution.
(1) increase the adjusted basis of partnership property by—
increase the adjusted basis of partnership property by—
(A) the amount of any gain recognized to the distributee partner with respect to such distribution under , and
(B) in the case of distributed property to which or (b) applies, the excess of the adjusted basis of the distributed property to the partnership immediately before the distribution (as adjusted by ) over the basis of the distributed property to the distributee, as determined under section 732, or
(2) decrease the adjusted basis of partnership property by—
decrease the adjusted basis of partnership property by—
(A) the amount of any loss recognized to the distributee partner with respect to such distribution under , and
(B) in the case of distributed property to which applies, the excess of the basis of the distributed property to the distributee, as determined under section 732, over the adjusted basis of the distributed property to the partnership immediately before such distribution (as adjusted by ).
The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in section 755.
(1) In general
For purposes of this section, there is a substantial basis reduction with respect to a distribution if the sum of the amounts described in subparagraphs (A) and (B) of subsection (b)(2) exceeds $250,000.
(2) Regulations
For regulations to carry out this subsection, see .
For purposes of this section, a securitization partnership (as defined in ) shall not be treated as having a substantial basis reduction with respect to any distribution of property to a partner.