Section 704(c) gain or loss occurs when a partner contributes property to the partnership and the property’s tax basis differs from its fair market value. The application of Section 704(c) affects how your partnership income is allocated. This is provided for your information, but is not reported on your personal 1040 return.
The IRS Instructions for Form 1065 Schedule K-1 Item N describe this further:
"The partnership is providing this for your information. If the partnership disposes of the property or there are special allocations due to depreciation, depletion, or amortization, the partnership will report these items on other parts of Schedule K-1."
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