Resulting Partnership May Use Partial Netting Approach For Certain Section 704(C) Allocations

In private letter rulings (PLRs) 201710007 and 201710008, the IRS responded to a request for rulings on three issues: first, whether the merger of several investment partnerships would result in a taxable gain under Section 721(b); second, whether the use of the partial netting approach by the partnership resulting from of the partnership merger (Surviving Partnership) was a reasonable method of making reverse Section 704(c) allocations; and third, whether the resulting partnership could aggregate built-in gains and losses from qualified financial assets (QFAs) contributed by the terminating investment partnerships (Terminating Partnerships) with built-in gains and losses from revaluations of QFAs already held by the resulting partnership.