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Distributed Transactions fail on Linked server

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We get the below error while performing a distributed transaction on linked server. We have several linked servers configured in the source server and all of them succeed with the distributed transaction except on one.

 

We did all the basic troubleshooting and moreover the distributed transactions work fine if we use a remote server instead.

 

Need your expert guidance in resolving this issue

 

 

Error:

 

OLE DB provider "SQLNCLI10" for linked server "SERVERNAME.REDMOND.CORP.MICROSOFT.COM" returned message "No transaction is active.".

Msg 7391, Level 16, State 2, Line 3

The operation could not be performed because OLE DB provider "SQLNCLI10" for linked server "SERVERNAME.REDMOND.CORP.MICROSOFT.COM" was unable to begin a distributed transaction.

 

 

Test code:

 

begindistributedtransaction

 

selecttop 10 *from [SERVERNAME.REDMOND.CORP.MICROSOFT.COM].master.sys.objects

 

ROLLBACK

 

 

Source server :   

 

Microsoft SQL Server 2008 (RTM) - 10.0.1779.0 (X64)

       Nov 12 2008 12:10:04

       Copyright (c) 1988-2008 Microsoft Corporation

       Enterprise Edition (64-bit) on Windows NT 6.0 <X64> (Build 6001: Service Pack 1) (VM)

 

 

Target server :  

 

Microsoft SQL Server 2008 (RTM) - 10.0.1600.22 (Intel X86)

       Jul  9 2008 14:43:34

       Copyright (c) 1988-2008 Microsoft Corporation

       Enterprise Edition on Windows NT 5.2 <X86> (Build 3790: Service Pack 2)

 


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