¹See 1 TD 9121 and REG-139792-02 (both dated 4/21/04). The temporary regulations were also issued as proposed regulations.

² See Temp. Regs. Sec. 1.704-1T(b)(1)(ii)(b).

³ The qualified income offset rules basically prevent a partners capital account from being negative through losses and/or distributions, to the extent that the partner is not obligated to restore the deficit, and it is not derived from deductions attributable to nonrecourse debts.

⁴ A partners share of income to which the tax relates includes any income allocated to the partner under Sec. 704(c) due to any transfer of built-in gain or loss assets to the partnership; see Temp Regs. Sec. 1.704-1T(b)(4)(xi)(a)(2).

⁵ See Regs. Sec. 1.904-6(a)(1)(iv).

⁶ See Temp. Regs. Sec. 1.704-1T(b)(5), Example 25.

⁷ See id., Example 26.

⁸ See id., Example 27.

⁹ See id., Example 28.