Extract to table

because the underlying property was itself contributed to the Legacy Offshore Vehicle by a limited partner with built-in gain or loss), those layers must also be tracked at the Master Fund level

The regulation provides that a partnership "may use different methods with respect to different items of contributed property," subject to the requirement that the method selected must be "reasonable" under the facts and circumstances

704-3(a)(2) provides that a partnership must use a "reasonable method" that is "consistent with the purpose of section 704(c)

In other words, the upper-tier partnership — as the "contributing partner" of the lower-tier partnership — must continue to take into account the variation between the adjusted tax basis and the FMV of the contributed property

The § 704(c) obligations previously borne by the Legacy Offshore Vehicles as "contributing partners" must then be allocated to the successor partners

When Fund IV-A Cayman subsequently contributes the NovaBright interest to the Master Fund, the pre-existing § 704(c) layer does not merge with the new layer; rather, both layers must be tracked separately at the Master Fund level