¹TD 8902 (9/20/00). TD 8902 also adopts final Regs. Sec. 1.1223-3, which explains the division of a partnership interest holding period. The final regulations, effective Sept. 21, 2000, adopt with some modifications the proposed regulations (REG-106527-98, 8/9/99).

²The Internal Revenue Service Restructuring and Reform Act of 1998, Section 6005(d), authorized regulations to apply the capital gain provisions to sales and exchanges of interests in passthrough entities.

³Under Sec. 1(h)(2)(B) and (h)(9), the 20% capital gain rate has been lowered to 18%, provided property has been held for more than five years and the taxpayer's holding period begins after 2000. The 10% capital gain rate under Sec. 1(h)(2)(A) has been lowered to eight percent, provided the property is held for more than five years when sold. These provisions apply to all gains other than "collectibles gain" (as defined in Sec. 1(h)(6)), unrecaptured Sec. 1250 gains and Sec. 1202 gains.

⁴See Examples 10 and 11 and the accompanying text, infra.

⁵While the regulations apply to transfers of trust interests, that discussion is beyond the scope of this article. In summary, transfers of trust interests may trigger collectibles gain and residual long-term capital gain or loss.

⁶It is assumed that the special allocation has substantial economic effect.

⁷The change was effective for sales or exchanges of partnership interests after Aug. 5, 1997, unless there was a binding contract before June 8, 1997.

⁸IRS Letter Ruling (TAM) 8836001 (5/13/88).

⁹See Manolakes, Partnerships and LLCs: Tax Practice and Analysis (CCH, Inc., 2000), at 1902.10.

¹⁰FSA 200024001 (2/8/00).

¹¹ See IRS Pub. 537, Installment Sales.

¹² See Manolakes, note 9 supra, at 1206.