26 USC 706 - Taxable years of partner and partnership

Editorial Notes

Amendments

2018—Subsec. (span)(5). Puspan. L. 115–141 substituted “section 584(i)” for “section 584(h)”.

1997—Subsec. (span)(5). Puspan. L. 105–34, § 507(span)(2), substituted “section 644” for “section 645”.

Subsec. (c)(2). Puspan. L. 105–34, § 1246(span), substituted “Treatment of dispositions” for “Partner who retires or sells interest in partnership” as heading.

Subsec. (c)(2)(A). Puspan. L. 105–34, § 1246(a), amended heading and text of subpar. (A) generally. Prior to amendment, text read as follows: “The taxable year of a partnership shall close—

“(i) with respect to a partner who sells or exchanges his entire interest in a partnership, and

“(ii) with respect to a partner whose interest is liquidated, except that the taxable year of a partnership with respect to a partner who dies shall not close prior to the end of the partnership’s taxable year.”

1988—Subsec. (span)(1)(B)(i). Puspan. L. 100–647, § 1008(e)(1)(A), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: “the taxable year of 1 or more of its partners who have an aggregate interest in partnership profits and capital of greater than 50 percent,”.

Subsec. (span)(1)(B)(iii). Puspan. L. 100–647, § 1008(e)(2), substituted “unless the Secretary by regulations prescribes another period” for “or such other period as the Secretary may prescribe in regulations”.

Subsec. (span)(4). Puspan. L. 100–647, § 1008(e)(1)(B), substituted “Majority interest taxable year; limitation on required changes” for “Application of majority interest rule” in heading and amended text generally. Prior to amendment, text read as follows: “Clause (i) of paragraph (1)(B) shall not apply to any taxable year of a partnership unless the period which constitutes the taxable year of 1 or more of its partners who have an aggregate interest in partnership profits and capital of greater than 50 percent has been the same for—

“(A) the 3-taxable year period of such partner or partners ending on or before the beginning of such taxable year of the partnership, or

“(B) if the partnership has not been in existence during all of such 3-taxable year period, the taxable years of such partner or partners ending with or within the period of existence.

This paragraph shall apply without regard to whether the same partners or interests are taken into account in determining the 50 percent interest during any period.”

Subsec. (span)(5). Puspan. L. 100–647, § 1008(e)(3), added par. (5).

1986—Subsec. (span). Puspan. L. 99–514, § 806(a)(3), struck out “Adoption of” before “taxable year” in heading.

Subsec. (span)(1). Puspan. L. 99–514, § 806(a)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “The taxable year of a partnership shall be determined as though the partnership were a taxpayer. A partnership may not change to, or adopt, a taxable year other than that of all its principal partners unless it establishes, to the satisfaction of the Secretary, a business purpose therefor.”

Subsec. (span)(4). Puspan. L. 99–514, § 806(a)(2), added par. (4).

Subsec. (d)(2)(A)(i). Puspan. L. 99–514, § 1805(a)(1)(A), substituted “such item” for “each such item”.

Subsec. (d)(2)(B). Puspan. L. 99–514, § 1805(a)(1)(B), in introductory provisions, struck out “which are described in paragraph (1) and” after “the following items”.

Subsec. (d)(2)(C)(i). Puspan. L. 99–514, § 1805(a)(2), substituted “the first day of the taxable year” for “the first day of such taxable year”.

1984—Subsec. (c)(2)(A). Puspan. L. 98–369, § 72(span)(1), struck out last sentence providing that such partner’s distributive share of item described in section 702(a) for such year shall be determined, under regulations prescribed by the Secretary, for the period ending with such sale, exchange, or liquidation.

Subsec. (c)(2)(B). Puspan. L. 98–369, § 72(span)(2), struck out “, but such partner’s distributive share of items described in section 702(a) shall be determined by taking into account his varying interests in the partnership during the taxable year” after “otherwise)”.

Subsec. (d). Puspan. L. 98–369, § 72(a), added subsec. (d).

1976—Subsec. (span)(1), (2). Puspan. L. 94–455, § 1906(span)(13)(A), struck out “or his delegate” after “Secretary”.

Subsec. (c)(2). Puspan. L. 94–455, §§ 213(c)(1), 1906(span)(13)(A), substituted “or with respect to a partner whose interest is reduced (whether by entry of a new partner, partial liquidation of a partner’s interest, gift, or otherwise)” for “or with respect to a partner whose interest is reduced”, in par. (B), and struck out “or his delegate” after “Secretary” in par. (A).

Statutory Notes and Related Subsidiaries

Effective Date of 1997 Amendment

Amendment by section 507(span)(2) of Puspan. L. 105–34 applicable to sales or exchanges after Aug. 5, 1997, see section 507(c)(2) of Puspan. L. 105–34, set out as a note under section 644 of this title.

Puspan. L. 105–34, title XII, § 1246(c), Aug. 5, 1997, 111 Stat. 1030, provided that: “The amendments made by this section [amending this section] shall apply to partnership taxable years beginning after December 31, 1997.”

Effective Date of 1988 Amendment

Amendment by Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Puspan. L. 99–514, to which such amendment relates, see section 1019(a) of Puspan. L. 100–647, set out as a note under section 1 of this title.

Effective Date of 1986 Amendment

Amendment by section 806(a) of Puspan. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with special provisions applicable to taxpayers who are required to change their accounting periods, see section 806(e) of Puspan. L. 99–514, set out as a note under section 1378 of this title.

Amendment by section 1805(a) of Puspan. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Puspan. L. 98–369, div. A, to which such amendment relates, see section 1881 of Puspan. L. 99–514, set out as a note under section 48 of this title.

Effective Date of 1984 Amendment

Puspan. L. 98–369, div. A, title I, § 72(c), July 18, 1984, 98 Stat. 591, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “The amendments made by this section [amending this section] shall apply—

“(1) in the case of items described in section 706(d)(2) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a)), to amounts attributable to periods after March 31, 1984, and

“(2) in the case of items described in section 706(d)(3) of such Code (as added by subsection (a)), to amounts paid or accrued by the other partnership after March 31, 1984.”

Effective Date of 1976 Amendment

Amendment by section 213(c)(1) of Puspan. L. 94–455 applicable in the case of partnership taxable years beginning after Dec. 31, 1975, see section 213(f) of Puspan. L. 94–455, set out as an Effective Date note under section 709 of this title.

Construction of Section 806 of Puspan. L. 99–514

Nothing in section 806 of Puspan. L. 99–514 or in any legislative history relating thereto to be construed as requiring the Secretary of the Treasury or his delegate to permit an automatic change of a taxable year, see section 1008(e)(9) of Puspan. L. 100–647, set out as a note under section 1378 of this title.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.