Treasury Regulations · 26 CFR
§ 1.734-2. Adjustment after distribution to transferee partner.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 734
Cite as 26 CFR § 1.734-2
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Source
- T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960; T.D. 9989, 89 FR 17606, Mar. 11, 2024, unless otherwise noted.
- Issued under
- 26 U.S.C. § 734
- Length
- 427 words · about 2 min to read
- Cross-references
- cites 6 Code sections and 2 regulations; cited by 3
Upon the death of his father, partner S acquires by inheritance a half-interest in partnership ACS. Partners A and C each have a one-quarter interest. The assets of the partnership consist of $10,000 cash and land used in farming worth $10,000 with a basis of $1,000 to the partnership. Since the partnership had made the election under section 754 at the time of transfer, partner S had a special basis adjustment of $4,500 under section 743(b) with respect to his undivided half-interest in the real estate. The basis of S's partnership interest, in accordance with section 742, is $10,000. S retires from the partnership and receives $10,000 in cash in exchange for his entire interest. Since S has received no part of the real estate, his special basis adjustment of $4,500 will be allocated to the real estate, the remaining partnership property, and will increase its basis to the partnership to $5,500.
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 743 Special rules where section 754 election or substantial built-in loss
- § 732 Basis of distributed property other than money
- § 734 Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction
- § 754 Manner of electing optional adjustment to basis of partnership property
- § 742 Basis of transferee partner’s interest
- § 751 Unrealized receivables and inventory items
Regulations it cites
- § 1.732-1 Basis of distributed property other than money.
- § 1.751-1 Unrealized receivables and inventory items.
Cited by 3 other regulations
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Distributions by a partnership
Nearby sections
- § 1.732-2 Special partnership basis of distributed property.
- § 1.732-3 Corresponding adjustment to basis of assets of a distributed corporation controlled by a corporate partner.
- § 1.733-1 Basis of distributee partner's interest.
- § 1.734-1 Optional adjustment to basis of undistributed partnership property.
- § 1.734-2 Adjustment after distribution to transferee partner.
- § 1.735-1 Character of gain or loss on disposition of distributed property.
- § 1.736-1 Payments to a retiring partner or a deceased partner's successor in interest.
- § 1.737-1 Recognition of precontribution gain.
- § 1.737-2 Exceptions and special rules.