U.S. Income Tax Return for Estates and Trusts

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2024

Instructions for Form 7217

Department of the Treasury
Internal Revenue Service

Partner’s Report of Property Distributed by a Partnership

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General Instructions

Part I—Aggregate Basis of
Distributed Property on Distribution
Date

Future Developments

Line 1

Section references are to the Internal Revenue Code
unless otherwise noted.

For the latest information about developments related to
Form 7217 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form7217.

Purpose of Form

Form 7217 is filed by any partner receiving a distribution of
property from a partnership in a non-liquidating or
liquidating distribution to report the basis of the distributed
property, including any basis adjustment to such property
as required by section 732(a)(2) or (b).

Who Must File

File with your annual tax return a separate Form 7217 for
each date during the tax year that you actually (and not
constructively) received distributed property subject to
section 732. If you received distributed properties subject
to section 732 on different days during the tax year, even if
part of the same transaction, file a separate Form 7217 for
each date that you received the properties. Do not file
Form 7217 if the distribution consisted only of money or
marketable securities treated as money. Also, do not file
Form 7217 for payments to you for services other than in
your capacity as a partner under section 707(a)(1) or for
transfers that are treated as disguised sales under section
707(a)(2)(B).

When To File

File Form 7217 by attaching it to your tax return for the tax
year you actually (and not constructively) received
distributed property subject to section 732. Form 7217 is
due at the time your tax return is due, including any
extensions.

Which Version or Revision To Use

Use the December 2024 version of Form 7217 for tax
years beginning in 2024 or later, until a later revision is
issued. All later revisions will be available at IRS.gov/
Form7217.

Specific Instructions
General Information

Line 2

Check the box to indicate whether any part of the
distribution was treated as a sale or exchange under
section 751(b). All or part of the distribution is treated as a
sale or exchange under section 751(b) to the extent you
received unrealized receivables or substantially
appreciated inventory in exchange for your interest in
other partnership property, or you received other property
in exchange for any part of your interest in unrealized
receivables or substantially appreciated inventory. If
section 751(b) applies to any part of the distribution,
attach a statement to Form 7217 showing the calculation
of any income, gain, or loss under section 751(b) to you
from the distribution. See Regulations section 1.751-1(b)
(5).

Line 3

Enter the partnership’s aggregate basis in the distributed
property (other than money) immediately before the
distribution, taking into account any adjustments under
sections 732(d), 734(b), or 743(b), as applicable. The
partnership will report this information to you on your
Schedule K-1 (Form 1065), line 19, code C; or, if
applicable, in a section 732(d) statement attached to your
Schedule K-1 (Form 1065). The amount entered on line 3
should equal the total amount of Part II, line B, column (b).

Line 4

Enter the adjusted basis of your interest in the partnership
(also known as outside basis) immediately before the
distribution. The basis of your interest in the partnership is
not directly reported on the Schedule K-1; you are
responsible for calculating this amount. For more
information on how to calculate the basis in your
partnership interest immediately before the distribution,
see Partner's Instructions for Schedule K-1 (Form 1065)
available at IRS.gov/instructions/i1065sk1.

Line 5

Enter your name, tax identification number (TIN), the
name of the partnership that distributed the property to
you, the partnership’s employer identification number
(EIN), and the date of the distribution on the appropriate
lines. A TIN can be a social security number (SSN).
Aug 28, 2024

Check the box to indicate whether the distribution was in
complete liquidation of your interest in the partnership.

Enter the amount of money you received or were deemed
to receive in the distribution. This amount includes
marketable securities treated as money and deemed
distributions of money under section 752(b). The
partnership will report this information to you on your
Schedule K-1 (Form 1065), line 19, code A.

Cat. No. 94871V

Line 8

Check the box to indicate whether you were required to
pay any U.S. tax on the gain entered on line 7, if any, as a
result of a distribution of money in excess of your outside
basis.

Line 9

Subtract line 6 from line 4. This is your outside basis
reduced by money (including marketable securities
treated as money and deemed distributions of money
under section 752(b)) you received or were deemed to
receive in the distribution.

• The amount in column (b) for the property is greater
than the amount in column (e). See section 732(f) for
details.
Column (c)(iii), 734(b). Indicate if the amount in column
(b) includes a section 734(b) basis adjustment.
Column (c)(iv), 743(b). Indicate if the amount in column
(b) includes a section 743(b) basis adjustment. This box
should be checked only if you have a section 743(b) basis
adjustment with respect to the distributed property.

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Line 10

For a non-liquidating distribution, enter the smaller of
line 3 or line 9. For a liquidating distribution, enter the
amount from line 9. This is the aggregate amount of basis
to be allocated to the distributed property (other than
money). This amount should equal the total amount of
Part II, line B, column (e).

Part II—Allocation of Basis of
Distributed Property

The partnership will report the information that you will
need to complete Part II to you on your Schedule K-1
(Form 1065), line 19, code C; or, if applicable, in a section
732(d) statement attached to your Schedule K-1 (Form
1065). Complete as many copies of Part II as necessary.

Columns (a) Through (e)

Column (a), Description of distributed property.
Enter a description for each distributed property that you
received. If applicable, include the asset class code of
each distributed property. For a list of asset class codes
see Appendix B in Pub. 946.

Column (b), Partnership's basis in distributed property immediately before the distribution. Enter the
partnership’s adjusted tax basis in each distributed
property immediately before the distribution. This amount
should include any basis adjustments under sections
732(d), 734(b), or 743(b), as applicable. See Regulations
sections 1.732-1(d) and 1.732-2 for rules relating to
distributions of property with a basis adjustment under
section 732(d), 734(b), or 743(b). The total amount (line
B) in this column should equal the amount on Part I, line 3.
Column (c)(i), 732(d). Indicate if the amount in column
(b) includes a special basis adjustment under section
732(d) either because you made an election under 732(d)
on your tax return or the special basis adjustment is
mandatory.
Column (c)(ii), 732(f). Indicate if the distributed property
is section 732(f) stock. Generally, property is section
732(f) stock if:
• You are a corporation,
• The distributed property is stock in another corporation,
• You have at least 80% of the total voting power or total
value of the stock of such other corporation immediately
after the distribution or at any time after the distribution,
and

2

Column (d), FMV of distributed property. Enter the fair
market value (FMV) of each distributed property. The
partnership will report the FMV of the distributed property
to you on your Schedule K-1 (Form 1065), line 19, code C.

Column (e), Partner's basis in distributed property
after application of section 732. Enter your basis in
each distributed property after the application of section
732. For a non-liquidating distribution where the section
732(a)(2) limitation applies, enter your basis in each
distributed property after the application of sections
732(a)(2) and (c). For a liquidating distribution, enter your
basis in each distributed property after the application of
sections 732(b) and (c). The total amount (line B) in this
column should equal the amount on Part I, line 10.

Calculating the Amounts in Column
(e) When Section 732(a)(2) or (b)
Applies
Non-Liquidating Distribution When Section
732(a)(2) Applies

Generally, your basis in distributed property equals the
partnership’s adjusted basis in the property immediately
before the distribution under section 732(a)(1). When the
partnership’s adjusted basis in distributed property (other
than money) exceeds your remaining outside basis after
reducing it by any money distributed, your basis in the
distributed property is limited under section 732(a)(2) to
your outside basis. When a distribution limited under
section 732(a)(2) consists of multiple properties, the
aggregate basis of the distributed properties must be
reduced, and the reduced aggregate basis must be
allocated among the distributed properties. For the
allocation of basis among multiple properties, see section
732(c).
Example 1—adjustment of partner’s basis following
distribution of cash and property. Jordan is a partner
of partnership Delta. Jordan has an outside basis of
$10,000. Jordan receives a non-liquidating distribution of
cash of $4,000 and property with an adjusted basis to the
partnership of $8,000. Jordan’s basis in the distributed
property is limited to $6,000 ($10,000, the adjusted basis
of Jordan’s interest, reduced by $4,000, the cash
distributed).

Liquidating Distribution When Section 732(b)
Applies

The aggregate basis of the distributed property that you
receive in a liquidating distribution must equal your
pre-distribution outside basis, reduced by any money
distributed. If the partnership’s aggregate adjusted basis
Instructions for Form 7217 (2024)

in the distributed property (other than money) is different
than your outside basis reduced by any money distributed,
the aggregate adjusted basis of the distributed property is
either increased or decreased so that it equals your
pre-distribution outside basis. The increased or decreased
aggregate basis must be allocated among the distributed
properties. See section 732(c) for more information.
Example 2—allocation of partner’s basis after cash
to distributed assets. Alex is a one-fourth partner in
partnership PRS and has an outside basis of $750. PRS
distributes inventory, asset X, asset Y, and $100 of cash to
Alex in liquidation of Alex’s entire partnership interest. The
partnership's basis in the inventory is $100 and it has an
FMV of $200. The partnership's basis in asset X is $50,
and it has an FMV of $400. The partnership's basis in
asset Y is $100 and it has an FMV of $100. Neither asset
X nor asset Y consists of inventory items or unrealized
receivables.

The amount of basis to be allocated to the distributed
properties under section 732(c) is $650, Alex's outside
basis reduced by money distributed. The inventory is
allocated its adjusted basis of $100. The remaining basis,
$550, is first allocated to the other distributed properties in
an amount equal to each property's adjusted basis to the
partnership. Asset X is allocated $50 and asset Y is
allocated $100. The remaining basis, $400, is allocated to
other distributed properties in proportion to, and to the
extent of, unrealized appreciation. Asset X is then
allocated $350, the amount of unrealized appreciation in
asset X.
Finally, the remaining basis, $50, is allocated to assets
X and Y in proportion to their FMVs: $40 to asset X
(400/500 x $50), and $10 to asset Y (100/500 x $50).
Therefore, after the distribution, Alex has an adjusted
basis of $100 in the inventory, $440 in asset X, and $110
in asset Y.

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Example 2. Allocation of Partner's Basis After Cash to Distributed Assets.
Cash and
property
distributed to
Alex by
Partnership's
partnership PRS
basis

Fair
market
value
(FMV)

Alex's basis
in distributed
property
after
application
of 732(b)

Explanation

Cash

$100

$100

$100

Alex's outside basis of $750 is reduced to $650 because of $100 cash distributed
to Alex. See section 732(b).

Inventory

$100

$200

$100

The basis of distributed properties is allocated first to inventory items in an
amount equal to the partnership's basis. See section 732(c)(1)(A)(i).

Asset X

$50

$400

$440

Asset Y

$100

$100

$110

Total property
(not including
cash)

$250

$700

$650

Instructions for Form 7217 (2024)

After subtracting $100 cash and allocating $100 to inventory basis, Alex's
remaining outside basis is $550. First, asset X is allocated $50 and asset Y is
allocated $100, the amount equal to each property's adjusted basis to the
partnership. See section 732(c)(1)(B)(i). Asset X is then allocated $350, the
amount of unrealized appreciation in asset X. See section 732(c)(2)(A). The
remaining outside basis of $50 is allocated to assets X and Y, in proportion to
their FMVs; $40 to asset X (400/500 x $50) and $10 to asset Y (100/500 x $50).
See section 732(c)(2)(B).
The total property basis must equal Alex's previous basis in the partnership
reduced by the $100 cash received. See section 732(b).

3

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4

Instructions for Form 7217 (2024)