Taxation of the Disposition of Partnership Interests: Time to Repeal I.R.C. Section 736

Authors

John A. Lynch Jr., University of Baltimore School of LawFollow

Abstract

I. Introduction

II. The Choice When a Partner Withdraws: Sale or Liquidation

III. The Checkered History of Sections 736 and 741 ... A. Development of Objective Tests ... B. Application of the Objective Tests by the Court ... 1. The Economic Consequences Test ... 2. The Basis of Payments Test ... 3. Maker of the Payments Test ... 4. Source of Payments Test ... 5. Obligation of Payments Test ... 6. Intention of the Parties Test

IV. The "Advantages" of Section 736 from a Policy Standpoint: Are They Appropriate? ... A. Trading of Tax Benefits ... B. Deductibility of Payments That Constitute Capital Expenditures ... C. Deduction of Payments That Amount to Mutual Insurance among Partners

V. A Proposal for Change

VI. Conclusion

Recommended Citation

John A. Lynch Jr., Taxation of the Disposition of Partnership Interests: Time to Repeal I.R.C. Section 736, 65 Neb. L. Rev. (1986)
Available at: https://digitalcommons.unl.edu/nlr/vol65/iss3/3