Loss cannot be recognized on a current (nonliquidating) distribution from a partnership unless cash, unrealized receivables, and/or § 1231 assets are the only items distributed.

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Loss can be recognized on a current distribution if the partner's adjusted basis in their partnership interest is greater than the adjusted basis of the property received in the distribution, not limited to cash, unrealized receivables, and/or § 1231 assets.

Loss Cannot Be Recognized on a Current (Nonliquidating) Distribution from a Partnership