Par. 4. Section 1.732-2 is amended by: 1. Redesignating paragraph (b) introductory text as (b)(1) introductory text and revising it. 2. Adding paragraph (b)(2. 3. Redesignating paragraph (c) as paragraph (d). 4. Adding a new paragraph (c). The revisions and addition reads as follows:
* * * * *
(b) Adjustments under section 743(b) —(1) In general. In the case of a distribution of property to a partner who acquired any part of its interest in a transfer, if there was an election under section 754 in effect with respect to the transfer, or if the partnership had a substantial built-in loss (as defined in § 1.743-1(a)(2)(i)) immediately after the transfer, then, for purposes of section 732 (other than subsection (d) thereof), the adjusted partnership basis of the distributed property shall take into account, in addition to any adjustments under section 734(b), the transferee's special basis adjustment for the distributed property under section 743(b). The application of this paragraph may be illustrated by the following example:
* * * * *
(2) Effective/applicability date. Paragraph (b)(1) of this section relating to substantial built-in losses is applicable for partnership distributions occurring on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register .
(c) Adjustments under section 704(c)(1)(C) —(1) In general. In the case of a distribution of property to a section 704(c)(1)(C) partner (as defined in § 1.704-3(f)(2)(ii)), for purposes of section 732 (other than subsection (d) thereof), the adjusted partnership basis of the distributed property shall take into account, in addition to any adjustments under section 734(b), the distributee's section 704(c)(1)(C) basis adjustment (if any) for the distributed property.
(2) Effective/applicability date. Paragraph (c)(1) of this section is applicable for partnership distributions occurring on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register .
* * * * *