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Section 732(d) provides that a partner who acquired all or part of his interest by a transfer with respect to which no sec754 election is in effect, and to whom property is distributed with respect to such interest within two years after the transfer, may elect to determine the adjusted basis of the distributed property as if sec743(b) were applicable. A special rule under Regs. sec1.732-1(6)(4) provides that a partner who acquires his partnership interest in the circumstances described above is required to apply the special basis rules of sec732(d) to any distribution, regardless of whether the distribution is within two years after the transfer, if certain conditions were met at the time he acquired his interest.
These conditions are that (i) the fair market value of all partnership property (other than money) exceeded 110% of its inside basis, (ii) an allocation of basis under sec732(c) upon a liquidation of his interest immediately after...