The IRS and Treasury Department recently issued temporary regulations (the “Temporary Regulations”) that can affect partnership contributions if: (i) a partnership receives a contribution of “built-in gain” property from a U.S. person and (ii) the partnership has one or more foreign partners that are related to the U.S. transferor. In general, the new regulations require U.S. persons that contribute assets to such a partnership to either recognize any “built-in gain” at the time of the transfer or apply a “gain deferral method” that—among other requirements—involves having the recipient partnership use the “remedial allocation method” to allocate items of “built-in” gain, income and deduction. A requirement to use the “remedial allocation method” means that although a U.S. transferor applying the “gain deferral method” will not need to immediately recognize “built-in gain”, such a transferor will often be subject to tax on the entire amount of any “built-in gain” over time.