Opinion ID: 411284
Heading Depth: 1
Heading Rank: 6

Heading: R.C. Sec. 704 provides in relevant part as follows:

Text: Sec. 704. Partner's Distributive Share. (a) Effect of Partnership Agreement. A partner's distributive share of income, gain, loss, deduction, or credit shall, except as otherwise provided in this section, be determined by the partnership agreement. (b) Distributive Share Determined by Income or Loss Ratio. A partner's distributive share of any item of income gain, loss, deduction, or credit shall be determined in accordance with his distributive share of taxable income or loss of the partnership, as described in section 702(a)(9), for the taxable year, if-- (1) the partnership agreement does not provide as to the partner's distributive share of such item, or (2) the principal purpose of any provision in the partnership agreement with respect to the partner's distributive share of such item is the avoidance or evasion of any tax imposed by this subtitle. (c) Contributed Property. (1) General Rule. In determining a partner's distributive share of items described in section 702(a), depreciation, depletion, or gain or loss with respect to property contributed to the partnership by a partner shall, except to the extent otherwise provided in paragraph (2) or (3), be allocated among the partners in the same manner as if such property had been purchased by the partnership. (2) Effect of Partnership Agreement. If the partnership agreement so provides, depreciation, depletion, or gain or loss with respect to property contributed to the partnership by a partner shall, under regulations prescribed by the Secretary or his delegate, be shared among the partners so as to take account of the variation between the basis of the property to the partnership and its fair market value at the time of contribution. (3) Undivided Interests. If the partnership agreement does not provide otherwise, depreciation, depletion, or gain or loss with respect to undivided interests in property contributed to a partnership shall be determined as though such undivided interests had not been contributed to the partnership. This paragraph shall apply only if all the partners had undivided interests in such property prior to contribution and their interests in the capital and profits of the partnership correspond with such undivided interests. (d) Limitation on Allowance of Losses. A partner's distributive share of partnership loss (including capital loss) shall be allowed only to the extent of the adjusted basis of such partner's interest in the partnership at the end of the partnership year in which such loss occurred. Any excess of such loss over such basis shall be allowed as a deduction at the end of the partnership year in which such excess is repaid to the partnership.... 5 See note 3 supra 6 The Commissioner filed the initial notice of appeal in this case (on September 11, 1981). Richardson, Schneider and Rice each filed a notice of appeal on September 14, 1981. By joint stipulation of the parties, the Commissioner dismissed his appeal 7 The panel in Williams also cited Marriott and Moore, see note 2 supra, and Rodman v. Commissioner, 542 F.2d 845 (2d Cir.1976) 8