Subpart D - Provisions Common to Other Subparts

26 USC 751 - Unrealized receivables and inventory items

(a) Sale or exchange of interest in partnership 
The amount of any money, or the fair market value of any property, received by a transferor partner in exchange for all or a part of his interest in the partnership attributable to
(1) unrealized receivables of the partnership, or
(2) inventory items of the partnership,

shall be considered as an amount realized from the sale or exchange of property other than a capital asset.

(b) Certain distributions treated as sales or exchanges 

(1) General rule 
To the extent a partner receives in a distribution
(A) partnership property which is
(i) unrealized receivables, or
(ii) inventory items which have appreciated substantially in value,

in exchange for all or a part of his interest in other partnership property (including money), or

(B) partnership property (including money) other than property described in subparagraph (A)(i) or (ii) in exchange for all or a part of his interest in partnership property described in subparagraph (A)(i) or (ii),

such transactions shall, under regulations prescribed by the Secretary, be considered as a sale or exchange of such property between the distributee and the partnership (as constituted after the distribution).

(2) Exceptions 
Paragraph (1) shall not apply to
(A) a distribution of property which the distributee contributed to the partnership, or
(B) payments, described in section 736 (a), to a retiring partner or successor in interest of a deceased partner.
(3) Substantial appreciation 
For purposes of paragraph (1)
(A) In general 
Inventory items of the partnership shall be considered to have appreciated substantially in value if their fair market value exceeds 120 percent of the adjusted basis to the partnership of such property.
(B) Certain property excluded 
For purposes of subparagraph (A), there shall be excluded any inventory property if a principal purpose for acquiring such property was to avoid the provisions of this subsection relating to inventory items.
(c) Unrealized receivables 
For purposes of this subchapter, the term unrealized receivables includes, to the extent not previously includible in income under the method of accounting used by the partnership, any rights (contractual or otherwise) to payment for
(1) goods delivered, or to be delivered, to the extent the proceeds therefrom would be treated as amounts received from the sale or exchange of property other than a capital asset, or
(2) services rendered, or to be rendered. For purposes of this section and,[1] sections 731, 732, and 741 (but not for purposes of section 736), such term also includes mining property (as defined in section 617 (f)(2)), stock in a DISC (as described in section 992 (a)), section 1245 property (as defined in section 1245 (a)(3)), stock in certain foreign corporations (as described in section 1248), section 1250 property (as defined in section 1250 (c)), farm land (as defined in section 1252 (a)), franchises, trademarks, or trade names (referred to in section 1253 (a)), and an oil, gas, or geothermal property (described in section 1254) but only to the extent of the amount which would be treated as gain to which section 617 (d)(1), 995 (c), 1245 (a), 1248 (a), 1250 (a), 1252 (a), 1253 (a), or 1254 (a) would apply if (at the time of the transaction described in this section or section 731, 732, or 741, as the case may be) such property had been sold by the partnership at its fair market value. For purposes of this section and,[1] sections 731, 732, and 741 (but not for purposes of section 736), such term also includes any market discount bond (as defined in section 1278) and any short-term obligation (as defined in section 1283) but only to the extent of the amount which would be treated as ordinary income if (at the time of the transaction described in this section or section 731, 732, or 741, as the case may be) such property had been sold by the partnership.
(d) Inventory items 
For purposes of this subchapter, the term inventory items means
(1) property of the partnership of the kind described in section 1221 (a)(1),
(2) any other property of the partnership which, on sale or exchange by the partnership, would be considered property other than a capital asset and other than property described in section 1231, and
(3) any other property held by the partnership which, if held by the selling or distributee partner, would be considered property of the type described in paragraph (1) or (2).
(e) Limitation on tax attributable to deemed sales of section 1248 stock 
For purposes of applying this section and sections 731 and 741 to any amount resulting from the reference to section 1248 (a) in the second sentence of subsection (c), in the case of an individual, the tax attributable to such amount shall be limited in the manner provided by subsection (b) of section 1248 (relating to gain from certain sales or exchanges of stock in certain foreign corporation).
(f) Special rules in the case of tiered partnerships, etc. 
In determining whether property of a partnership is
(1) an unrealized receivable, or
(2) an inventory item,

such partnership shall be treated as owning its proportionate share of the property of any other partnership in which it is a partner. Under regulations, rules similar to the rules of the preceding sentence shall also apply in the case of interests in trusts.

[1] So in original. The comma probably should not appear.

26 USC 752 - Treatment of certain liabilities

(a) Increase in partner’s liabilities 
Any increase in a partners share of the liabilities of a partnership, or any increase in a partners individual liabilities by reason of the assumption by such partner of partnership liabilities, shall be considered as a contribution of money by such partner to the partnership.
(b) Decrease in partner’s liabilities 
Any decrease in a partners share of the liabilities of a partnership, or any decrease in a partners individual liabilities by reason of the assumption by the partnership of such individual liabilities, shall be considered as a distribution of money to the partner by the partnership.
(c) Liability to which property is subject 
For purposes of this section, a liability to which property is subject shall, to the extent of the fair market value of such property, be considered as a liability of the owner of the property.
(d) Sale or exchange of an interest 
In the case of a sale or exchange of an interest in a partnership, liabilities shall be treated in the same manner as liabilities in connection with the sale or exchange of property not associated with partnerships.

26 USC 753 - Partner receiving income in respect of decedent

The amount includible in the gross income of a successor in interest of a deceased partner under section 736 (a) shall be considered income in respect of a decedent under section 691.

26 USC 754 - Manner of electing optional adjustment to basis of partnership property

If a partnership files an election, in accordance with regulations prescribed by the Secretary, the basis of partnership property shall be adjusted, in the case of a distribution of property, in the manner provided in section 734 and, in the case of a transfer of a partnership interest, in the manner provided in section 743. Such an election shall apply with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable year with respect to which such election was filed and all subsequent taxable years. Such election may be revoked by the partnership, subject to such limitations as may be provided by regulations prescribed by the Secretary.

26 USC 755 - Rules for allocation of basis

(a) General rule 
Any increase or decrease in the adjusted basis of partnership property under section 734 (b) (relating to the optional adjustment to the basis of undistributed partnership property) or section 743 (b) (relating to the optional adjustment to the basis of partnership property in the case of a transfer of an interest in a partnership) shall, except as provided in subsection (b), be allocated
(1) in a manner which has the effect of reducing the difference between the fair market value and the adjusted basis of partnership properties, or
(2) in any other manner permitted by regulations prescribed by the Secretary.
(b) Special rule 
In applying the allocation rules provided in subsection (a), increases or decreases in the adjusted basis of partnership property arising from a distribution of, or a transfer of an interest attributable to, property consisting of
(1) capital assets and property described in section 1231 (b), or
(2) any other property of the partnership,

shall be allocated to partnership property of a like character except that the basis of any such partnership property shall not be reduced below zero. If, in the case of a distribution, the adjustment to basis of property described in paragraph (1) or (2) is prevented by the absence of such property or by insufficient adjusted basis for such property, such adjustment shall be applied to subsequently acquired property of a like character in accordance with regulations prescribed by the Secretary.

(c) No allocation of basis decrease to stock of corporate partner 
In making an allocation under subsection (a) of any decrease in the adjusted basis of partnership property under section 734 (b)
(1) no allocation may be made to stock in a corporation (or any person related (within the meaning of sections 267 (b) and 707 (b)(1)) to such corporation) which is a partner in the partnership, and
(2) any amount not allocable to stock by reason of paragraph (1) shall be allocated under subsection (a) to other partnership property.

Gain shall be recognized to the partnership to the extent that the amount required to be allocated under paragraph (2) to other partnership property exceeds the aggregate adjusted basis of such other property immediately before the allocation required by paragraph (2).