(1) For all taxable years with respect to which a preliminary assessment of income tax could be made under the provisions of §40-2A-7, Code of Ala. 1975, as of May 27, 1997, and thereafter:
- (a) Basis of property to subchapter K entity - A subchapter K entity's basis in property contributed to it under §40-18-8(o),Code of Ala. 1975, by a partner or member shall be determined according to 26 U.S.C. §723.
(b) Basis of interest in subchapter K entity -
- 1. A contributing partner's or member's initial basis in a subchapter K entity interest acquired by a contribution of property (including money as described in §40-18-8[o]) to the subchapter K entity shall be determined according to 26 U.S.C. §722.
- 2. Increases and decreases to the initial basis determined under paragraph 1 shall be made according to 26 U.S.C. §705, and those adjustments to the initial basis shall be determined without regard to the allocation and apportionment rules of Section 40-18-22.
- 3. Special basis adjustments - The basis of the property of the subchapter K entity shall be determined according to 26 U.S.C. §§734 and 743, if the subchapter K entity has in effect an election under 26 U.S.C. §754 (relating to optional adjustment to basis of partnership property).
- (c) Basis of property distributed by subchapter K entity - The basis of property (other than money) distributed by a subchapter K entity to a partner or member other than in liquidation of the partner's or member's interest shall be determined according to 26 U.S.C. §732.
- (2) No refunds shall be due or issued by reason of this regulation with respect to taxable years beginning before January 1, 1997.
- (3) For interpretation of federal statutes adopted by the Alabama Legislature see Rule 810-3-1.1-.01, Operating Rules.
Author: Ann Fondren Winborne, CPA, Nancy D. Hatfield
Statutory Authority: Code of Ala. 1975, §§40-2A-7(a)(5), 40-18-6.
History: New Rule: Filed March 26, 1998; effective April 30, 1998. Amended: Filed April28, 1999; effective June 2, 1999.