Leigh Osofsky (Fenwick & West, Mountain View, CA) has published Solving Section 734(b), 60 Tax Law. 473 (2007).  Here is the Conclusion:

This Article presents two fundamental fixes for section 734(b). One fix, the share of inside basis, outside basis dilemma, makes section 734(b) work better under the contemporary distribution system. The second deals with current distributions. This fix rejects the section 704(c) methods and offers instead both a moderate way to deal with at least some current distributions (basic partial liquidations), and a new way to deal with more complicated distributions. The new method re-envisions section 734(b) so that it can work across all distributions. Certainly both the details and broader impact of this solution merit further contemplation. But perhaps this new vision is necessary to make this important section correct and workable.