26 USC 707 - Transactions between partner and partnership

Editorial Notes

Amendments

1986—Subsec. (a)(2)(B)(iii). Puspan. L. 99–514, § 1805(span), substituted “sale or exchange of property” for “sale of property”.

Subsec. (span)(1). Puspan. L. 99–514, § 1812(c)(3)(B), inserted at end “For purposes of section 267(a)(2), partnerships described in subparagraph (B) of this paragraph shall be treated as persons specified in section 267(span).”

Subsec. (span)(1)(A). Puspan. L. 99–514, § 1812(c)(3)(A), substituted “a person” for “a partner”.

Subsec. (span)(2)(A). Puspan. L. 99–514, § 1812(c)(3)(A), substituted “a person” for “a partner”.

Puspan. L. 99–514, § 642(a)(2), substituted “50 percent” for “80 percent”.

Subsec. (span)(2)(B). Puspan. L. 99–514, § 642(a)(2), substituted “50 percent” for “80 percent”.

1984—Subsec. (a). Puspan. L. 98–369 designated existing provisions as par. (1) and added par. (2).

1976—Subsec. (span)(2). Puspan. L. 94–455, § 1901(span)(3)(C), substituted “as ordinary income” for “as gain from the sale or exchange of property other than a capital asset”.

Subsec. (c). Puspan. L. 94–455, § 213(span)(3), substituted “and, subject to section 263, for purposes of section 162(a)” for “and section 162(a)”.

Statutory Notes and Related Subsidiaries

Effective Date of 1986 Amendment

Amendment by section 642(a)(2) of Puspan. L. 99–514 applicable to sales after Oct. 22, 1986, in taxable years ending after such date, but not applicable to sales made after Aug. 14, 1986, which are made pursuant to a binding contract in effect on Aug. 14, 1986, and at all times thereafter, see section 642(c) of Puspan. L. 99–514, set out as a note under section 1239 of this title.

Amendment by sections 1805(span) and 1812(c)(3)(B) 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.

Puspan. L. 99–514, title XVIII, § 1812(c)(3)(A), Oct. 22, 1986, 100 Stat. 2834, provided that the amendment made by that section is effective with respect to sales or exchanges after Sept. 27, 1985.

Effective Date of 1984 Amendment

Puspan. L. 98–369, div. A, title I, § 73(span), July 18, 1984, 98 Stat. 592, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(1)In general.—The amendment made by subsection (a) [amending this section] shall apply—

“(A) in the case of arrangements described in section 707(a)(2)(A) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by subsection (a)), to services performed or property transferred after February 29, 1984, and

“(B) in the case of transfers described in section 707(a)(2)(B) of such Code (as so amended), to property transferred after March 31, 1984.

“(2)Binding contract exception.—The amendment made by subsection (a) shall not apply to a transfer of property described in section 707(a)(2)(B)(i) if such transfer is pursuant to a binding contract in effect on March 31, 1984, and at all times thereafter before the transfer.

“(3)Exception for certain transfers.—The amendment made by subsection (a) shall not apply to a transfer of property described in section 707(a)(2)(B)(i) that is made before December 31, 1984, if—

“(A) such transfer was proposed in a written private offering memorandum circulated before February 28, 1984;

“(B) the out-of-pocket costs incurred with respect to such offering exceeded $250,000 as of February 28, 1984;

“(C) the encumbrances placed on such property in anticipation of such transfer all constitute obligations for which neither the partnership nor any partner is liable; and

“(D) the transferor of such property is the sole general partner of the partnership.”

Effective Date of 1976 Amendment

Amendment by section 213(span)(3) of Puspan. L. 94–455 applicable in the case of partnership taxable years beginning after Dec. 31, 1975, see section 213(f)(1) of Puspan. L. 94–455, set out as an Effective Date note under section 709 of this title.

Amendment by section 1901(span)(3)(C) of Puspan. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Puspan. L. 94–455, set out as a note under section 2 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.