One of the uniquenesses of the partnership form of business organization is the opportunity to make an election for a new partner (as to the purchase price if above the income tax basis), or the successor to a deceased partner (as to the excess of the new income tax basis at death over the pro rata share of the basis of partnership property) and to distributions of property by the partnership, to adjust the basis of partnership property to apply to property distributions by the partnership and to transfers of interests in the partnership.1 A corporation, by contrast, provides no opportunity to adjust the “internal” basis of assets as the external basis changes as a result of sale or exchange2 or death.3 That continues to pose a significant disadvantage for farm and ranch corporations.



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