Extract to table

Section 722 of the Code provides that the basis of a partnership interest acquired by a partner in exchange for a contribution of property to the partnership shall be equal to the amount of money and the adjusted basis of the property contributed

Section 723 of the Code provides that the basis of property contributed to a partnership by a partner shall be the adjusted basis of such property to the contributing partner at the time of the contribution

Exceptions and Limitations While Section 721(a) provides a broad nonrecognition rule, there are several exceptions and limitations that must be considered in connection with the proposed rollover

When a partnership interest is transferred (by sale or exchange) or when a partnership distribution is made, Section 743(b) of the Code provides that the partnership may (or, if a Section 754 election is in effect, must) adjust the basis of partnership property with respect to the transferee partner

The control test must be satisfied "immediately after the exchange

Section 362(a) provides that, if property is acquired by a corporation in connection with a Section 351 exchange, the corporation's basis in the property shall be the same as the basis in the hands of the transferor, increased by any gain recognized to the transferor on the exchange