I've got a hypo I could use some help with (clueless first year). Is anyone familiar with the tax consequences of purchasing/selling partnership interests in settlement of litigation? Plaintiff partner is suing defendant partner. Defendant partner wants to buy out plaintiff. The partnership would remain alive, just without plaintiff partner. Wondering if settlement origin of the claim doctrine would impact whether it classifies as a deductible expense or could be a nondeductible capital outlay

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I think there is a treatise by Wood that addresses the tax treatment of settlements that might be helpful.

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Great, thanks!

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Not sure if anyone has any research recommendations for something like this. Westlaw hasn't been particularly helpful as this isn’t necessarily a straightforward partnership redemption due to the settlement aspect. It might be the same tax consequences as normal, but want to confirm the settlement aspect doesn’t impact it

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