(a) Contributions of unrealized receivables. — In the case of any property which:(1) Was contributed to the partnership by any partner, and(2) was an unrealized receivable in the hands of such partner immediately before such contribution, any gain or loss recognized by the partnership on the disposition of such property during the five (5)-year period beginning on the date of such contribution shall be treated as ordinary income or ordinary loss, as the case may be.(b) Contributions of inventory items. — In the case of any property which:(1) Was contributed to the partnership by a partner, and(2) was an inventory item in the hands of such partner immediately before such contribution, any gain or loss recognized by the partnership on the disposition of such property during the five (5)-year period beginning on the date of such contribution shall be treated as ordinary income or ordinary loss, as the case may be.(c) Contributions of capital loss property. — In the case of any property which:(1) Was contributed by a partner to the partnership, and(2) was a capital asset in the hands of such partner immediately before such contribution, any loss recognized by the partnership on the

which:(1) Was contributed by a partner to the partnership, and(2) was a capital asset in the hands of such partner immediately before such contribution, any loss recognized by the partnership on the disposition of such property during the five (5)-year period beginning on the date of such contribution shall be treated as a loss from the sale or exchange of a capital asset to the extent that, immediately before such contribution, the adjusted basis of such property in the hands of the partner exceeded the fair market value of such property.(d) Definitions. — For purposes of this section:(1) Unrealized receivable. — Shall have the meaning given in § 30371(c) of this title (determined by treating any reference to the partnership as referring to the partner).(2) Inventory item. — Shall have the meaning given in § 30371(d) of this title (determined by treating any reference to the partnership as referring to the partner and by applying § 30141(a) of this title, without regard to any holding period).(3) Substituted basis property. — If any property described in subsection (a), (b), or (c) is disposed of in a nonrecognition transaction, the tax treatment which applies to such property

ing period).(3) Substituted basis property. — If any property described in subsection (a), (b), or (c) is disposed of in a nonrecognition transaction, the tax treatment which applies to such property under such subsection shall also apply to any substituted basis property resulting from such transaction. A similar rule shall also apply in the case of a series of nonrecognition transactions. History —Jan. 31, 2011, No. 1, § 1072.04, retroactive to Jan. 1, 2011.