Corpus

Fund-of-funds structure where TopCo LP invests $100M across three institutional operating real estate funds. Operating funds generate early-year depreciation losses and later capital gains from property sales. Issue involves basis tracking across tiered partnership structure and whether mid-year distributions from operating funds can be tested against year-end outside basis after netting all Section 705(a) adjustments.

Upper Fund LP owns 80% of Lower Fund LP, which sold a portfolio company for $50M gain. Upper Fund's internal books showed $30M basis in its Lower Fund interest, but client sought to reconstruct basis from historical K-1s showing untracked Section 705(a)(1) income allocations and Section 752 liability allocations that could support materially higher basis and reduce gain on distribution.

Partnership holding appreciated warehouse ($12M FMV, $4M basis, $3M debt) with two 50% partners seeking divergent exit strategies: one partner wants cash, the other wants Section 1031 exchange. Partners had substantive price negotiations ($11.5-12.5M range) with potential buyer six weeks before contemplating distribution of property to partners as tenants-in-common, with written communications showing exit intent two months prior.

Family and co-investors held appreciated commercial property ($15M FMV, $4M basis) in partnership-taxed LLC. Majority partner sought to 1031 exchange into individually-owned replacement property while minority partners wanted cash liquidity. Partnership executed formal dissolution distributing property to majority partner and cash to minority partners, followed 60 days later by majority partner's individual Section 1031 exchange into pre-identified Dallas replacement property.