(a) General rule. — The basis of partnership property shall not be adjusted as the result of a distribution of property to a partner unless the election provided in § 30374 of this title (relating to optional adjustment to basis of partnership property) is in effect with respect to such partnership, or unless there is a substantial basis reduction with respect to such distribution.(b) Method of adjustment. — In the case of a distribution of property to a partner by a partnership with respect to which the election provided in § 30374 of this title is in effect, or with respect to which there is a substantial basis reduction, the partnership shall:(1) Increase the adjusted basis of partnership property by:(A) The amount of any gain recognized to the distributee partner with respect to such distribution under § 30351(a)(1) of this title, and(B) in the case of distributed property to which subsection (a)(2) or (b) of § 30352 of this title applies, the excess of the adjusted basis of the distributed property to the partnership immediately before the distribution (as adjusted by § 30352(d) of this title) over the basis of the distributed property to the distributee, as determined under

istributed property to the partnership immediately before the distribution (as adjusted by § 30352(d) of this title) over the basis of the distributed property to the distributee, as determined under said § 30352 of this title, or(2) decrease the adjusted basis of partnership property by:(A) The amount of any loss recognized to the distributee partner with respect to such distribution under § 30351(a)(2) of this title, and(B) in the case of distributed property to which § 30352(b) of this title applies, the excess of the adjusted basis of the distributed property to the distributee, as determined under § 30352 of this title, over the adjusted basis of the distributed property to the partnership immediately before such distribution (as adjusted by § 30352(d) of this title).Clause (1)(B) shall not apply to any distributed property which is an interest in another partnership with respect to which the election provided in § 30374 of this title is not in effect.(c) Allocation of basis. — The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in § 30375 of this title.(d) Substantial basis reduction.

— The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in § 30375 of this title.(d) Substantial basis reduction. —(1) In general. — For purposes of this section, there is a substantial basis reduction with respect to a distribution if the sum of the amounts described in paragraphs (A) and (B) of subsection (b)(2) exceeds two hundred fifty thousand dollars ($250,000).(2) Regulations. — For regulations necessary to carry out this subsection, see § 30363(d)(2) of this title.(e) Exception for securitization partnerships. — For purposes of this section, a securitization partnership (as defined in § 30363(f) of this title) shall not be treated as having a substantial basis reduction with respect to any distribution of property to a partner. History —Jan. 31, 2011, No. 1, § 1073.04, retroactive to Jan. 1, 2011.