§212.  Extent of recognition of gain or loss on distribution

A.  Partners.  In the case of a distribution by a partnership to a partner,

(1)  gain shall not be recognized to such partner, except to the extent that any money distributed exceeds the adjusted basis of such partner's interest in the partnership immediately before the distribution, and

(2)  loss shall not be recognized to such partner, except that upon a distribution in liquidation of a partner's interest in a partnership where no property other than that described in Subsection A(2)(a) or A(2)(b) of this Section is distributed to such partner, loss shall be recognized to the extent of the excess of the adjusted basis of such partner's interest in the partnership over the sum of:

(a)  any money distributed, and

(b)  the basis in the hands of the distributee, as determined under R.S. 47:213, of any unrealized receivables (as defined in R.S. 47:213 E) and inventory (as defined in R.S. 47:213 F).  

Any loss or gain recognized under the Subsection shall be considered a gain or loss from the sale or exchange of the partnership interest of the distributee partner.  

B.  Partnerships.  No gain or loss shall be recognized to a partnership on a distribution to a partner of property, including money.  

C.  Exceptions.  This Section shall not apply to the extent otherwise provided by R.S. 47:216 (relating to payments to a retiring partner or a deceased partner's successor in interest).  

Added by Acts 1958, No. 441, §2.