Daniel L. Simmons (UC-Davis) has posted Built-In Gain and Built-In Loss Property on Formation of a Partnership: An Exploration of the Grand Elegance of Partnership Capital Accounts, 9 Fla. Tax Rev. ___ (2009), on SSRN.  Here is the abstract:

This article is a primer on the issues faced by partners in dealing with the consequences of built-in gain or loss property contributed to a partnership. The article explores the tax consequences of almost every aspect of the partnership treatment of built-in gain and loss property.

The use of properly maintained capital accounts to answer tax allocation questions is a principal focus of the article. The first part of the article discusses basic principles of partnership taxation that provide for the formation of partnerships and allocation of partnership book and tax items. A thorough understanding of these fundamental principles is a prerequisite to discussing the problems of built-in gain and loss property. Part II considers the problems raised by contributions of built-in gain property. The analysis demonstrates that recent proposed Treasury regulations regarding contributed built-in gain or loss property and partnership mergers in some circumstances create mischief by failing to fully address deferred recognition. Part III looks at the complexity that is added by the existence of debt in the partnership. Part IV addresses special problems created by built-in loss property, including the issues raised by § 704(c)(1)(C), enacted in 2004. The analysis in this part demonstrates the need for analyzing partnership capital accounts in order to apply the basis limitation of § 704(c)(1)(C)(ii) in the context of its statutory purpose and suggests an interpretation of § 704(c)(1)(C)(ii) in conjunction with optional basis adjustments that produces proper allocations of loss. Part V considers partnership allocations that occur on the admission of a new partner to a partnership with built-in gain and built-in loss property.