(a) Contribution of unrealized receivables. — In the case of any property which:(1) Was contributed to the special 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 loss, as the case may be.(b) Contribution of inventory items. — In the case of any property which:(1) Was contributed to the special partnership by any 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 loss, as the case may be.(c) Contribution of capital loss property. — In the case of any property which:(1) Was contributed by any partner to the special partnership, and(2) was a capital asset in the hands of such partner immediately before such contribution, any loss recognized by the partnership on

:(1) Was contributed by any partner to the special 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 receivables. — The term 'unrealized receivables' shall have the same meaning given to such term by § 30570(c) of this title.(2) Inventory items. — The term 'inventory items' shall have the same meaning given to such term by § 30570(d) of this title.(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 subsections shall also apply to any substituted basis property resulting from such transaction.

isposed of in a nonrecognition transaction, the tax treatment which applies to such property under such subsections shall also apply to any substituted basis property resulting from such transaction. A similar rule shall apply in the case of a series of nonrecognition transactions. History —Jan. 31, 2011, No. 1, § 1114.10, retroactive to Jan. 1, 2011.