I 

111TH CONGRESS 

2D SESSION H. R. 4839 

To amend the Internal Revenue Code of 1986 to exclude from gross income 

contributions to the capital of a partnership, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 12, 2010 

Mr. DAVIS of Illinois (for himself, Mr. ROSKAM, and Mr. TIBERI) introduced 

the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to exclude 

from gross income contributions to the capital of a partnership, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. EXCLUSION OF CONTRIBUTIONS TO CAPITAL 

4 OF PARTNERSHIP. 

5 (a) IN GENERAL.—Subsection (a) of section 118 of 

6 the Internal Revenue Code of 1986 is amended by insert7 ing before the period at the end the following: ‘‘, and, in 

8 the case of a partnership, gross income shall not include 

9 contributions to the capital of the partnership’’. 


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1 (b) BASIS OF PROPERTY CONTRIBUTED TO PART2 NERSHIP.—Section 723 of such Code is amended— 

3 (1) by striking ‘‘The basis of property’’ and in4 serting the following: 

5 ‘‘(a) IN GENERAL.—Except as provided in subsection 

6 (b), the basis of property’’, and 

7 (2) by adding at the end the following new sub8 section: 

9 ‘‘(b) CONTRIBUTIONS TO CAPITAL.— 

10 ‘‘(1) PROPERTY OTHER THAN MONEY.—If prop11 erty other than money— 

12 ‘‘(A) is acquired by a partnership as a con13 tribution to capital, and 

14 ‘‘(B) is not contributed by a partner as 

15 such, 

16 then the basis of such property shall be zero. 

17 ‘‘(2) MONEY.—If money— 

18 ‘‘(A) is received by a partnership as a con19 tribution to capital, and 

20 ‘‘(B) is not contributed by a partner as 

21 such, 

22 then the basis of any property acquired with such 

23 money during the 12-month period beginning on the 

24 day the contribution is received shall be reduced by 

25 the amount of such contribution. The excess (if any) 


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1 of the amount of such contribution over the amount 

2 of the reduction under the preceding sentence shall 

3 be applied to the reduction (as of the last day of the 

4 period specified in the preceding sentence) of the 

5 basis of any other property of the partnership. The 

6 particular properties to which the reductions re7 quired by this paragraph shall be allocated shall be 

8 determined under regulations prescribed by the Sec9 retary.’’. 

10 (c) NO INCREASE IN BASIS OF PARTNER’S INTER11 EST.—Subparagraph (B) of section 705(a)(1) of such 

12 Code is amended by inserting ‘‘(other than amounts ex13 cluded from gross income under section 118)’’ after ‘‘ex14 empt from tax under this title’’. 

15 (d) CONFORMING AMENDMENT.—The heading for 

16 section 118 of such Code is amended by striking ‘‘OF A

17 CORPORATION’’ and inserting ‘‘OF CORPORATIONS

18 AND PARTNERSHIPS’’. 

19 (e) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to contributions made after the 

21 date of the enactment of this Act. 

Æ 


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