Distributing a Partner’s Contributed Property to Someone Else Can Trigger the Contributor’s Gain
The seven-year mixing-bowl rule follows the contributed asset, not just the cash received.
TOPIC COLLECTION
Contributed property
A focused reading path from Entity Economics. Start with the question closest to your situation, then review the linked sources and documentation steps.
A Contributor Takes Other Property Out: Section 737 Can Release Old Built-In Gain
A later noncash distribution can tax the partner who previously contributed appreciated property.