In case of a distribution of interests by the special partnership or a distribution in total or partial liquidation of the interest of a partner in said special partnership:(1) Gain shall only be recognized to such partner to the extent that the money received exceeds the adjusted basis of his/her interest in said special partnership immediately before the distribution, and(2) losses shall only be recognized to such partner in the case of a distribution in total liquidation of a partner’s interest if the distributed property is part of the property described in clauses (A) or (B) below. The amount of the loss shall be the excess of the adjusted basis of the partner’s interest in the special partnership over the sum of:(A) Any money distributed, and(B) the partner’s basis determined as provided in § 30577 of this title, of any unrealized receivables or inventory (as defined in § 30570 of this title).Any gain recognized under this subsection shall be treated as realized in the sale or exchange of a capital asset. Any loss recognized under this subsection shall be an ordinary loss.(3) Special rule.

ny gain recognized under this subsection shall be treated as realized in the sale or exchange of a capital asset. Any loss recognized under this subsection shall be an ordinary loss.(3) Special rule. — This section shall not apply to distributions made to a retiring partner or a deceased partner successor in interest. In these cases, the provisions of § 30575 of this title shall apply. History —Jan. 31, 2011, No. 1, § 1114.19, retroactive to Jan. 1, 2011.