Tax News

CCH (cch.taxgroup.com) reports:

The IRS has published procedures allowing additional partnerships to use an aggregate method of allocating gains and losses under Reg. §704-3(e)(3) when the partnership revalues its property under Reg. §1.704-1(b)(2)(iv)(f) (a "reverse section 704(c)
allocation"). As of October 1, 2007, "qualified partnerships" may elect to aggregate built-in gains and losses from "qualified financial assets" for purposes of making "reverse Code Sec. 704(c) allocations." Taxpayers may, however, apply these rules to tax years beginning after December 31, 2005.
The terms "qualified partnership" and "qualified financial asset" are specifically defined for purposes of the new procedure. Once applied, the same aggregate approach must generally be used for all qualified financial assets for all tax years in which the partnership is a "qualified partnership."
If an electing partnership fails to qualify as a "qualified partnership" after making the election, the partnership then must make "reverse section 704(c)
allocations" on an asset-by-asset basis after the date of disqualification. The partnership, however, is not required to disaggregate the book gain or book loss from qualified asset revaluations before the date of disqualification when making "reverse section 704(c)
allocations" on or after the date of disqualification.
Rev. Proc. 2007-59, 2007FED ¶46,621
Other References:
Code Sec. 704
CCH Reference - 2007FED ¶25,135.40
Tax Research Consultant
CCH Reference - TRC PART: 9,152.05