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26 U.S.C. § 709 — Treatment of organization and syndication fees
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Except as provided in subsection (b), no deduction shall be allowed under this chapter to the partnership or to any partner for any amounts paid or incurred to organize a partnership or to promote the sale of (or to sell) an interest in such partnership.
**(b) Deduction of organization fees**
(1) **Allowance of deduction** — If a partnership elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenses—
(A) the partnership shall be allowed a deduction for the taxable year in which the partnership begins business in an amount equal to the lesser of—
(i) the amount of organizational expenses with respect to the partnership, or
(ii) $5,000, reduced (but not below zero) by the amount by which such organizational expenses exceed $50,000, and
(B) the remainder of such organizational expenses shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the partnership begins business.
(2) **Dispositions before close of amortization period** — In any case in which a partnership is liquidated before the end of the period to which paragraph (1)(B) applies, any deferred expenses attributable to the partnership which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.
(3) **Organizational expenses defined** — The organizational expenses to which paragraph (1) applies, are expenditures which—
(A) are incident to the creation of the partnership;
(B) are chargeable to capital account; and
(C) are of a character which, if expended incident to the creation of a partnership having an ascertainable life, would be amortized over such life.
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 709
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Stable record: federal_law:legal_authorities:record_usc_a351f128cfd53455e54940eb
Source file: Laws/federal/codes/united-states-code/title-26/section-709-treatment-of-organization-and-syndication-fees--e58ead3dbb.md
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Source location: Title 26, Chapter 1, § 709; chapter-001-normal-taxes-and-surtaxes.md
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**(a) General rule** Except as provided in subsection (b), no deduction shall be allowed under this chapter to the partnership or to any partner for any amounts paid or incurred to organize a partnership or to promote the sale of (or to sell) an interest in such partnership.
**(b) Deduction of organization fees**
(1) **Allowance of deduction** — If a partnership elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenses—
(A) the partnership shall be allowed a deduction for the taxable year in which the partnership begins business in an amount equal to the lesser of—
(i) the amount of organizational expenses with respect to the partnership, or
(ii) $5,000, reduced (but not below zero) by the amount by which such organizational expenses exceed $50,000, and
(B) the remainder of such organizational expenses shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the partnership begins business.
(2) **Dispositions before close of amortization period** — In any case in which a partnership is liquidated before the end of the period to which paragraph (1)(B) applies, any deferred expenses attributable to the partnership which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.
(3) **Organizational expenses defined** — The organizational expenses to which paragraph (1) applies, are expenditures which—
(A) are incident to the creation of the partnership;
(B) are chargeable to capital account; and
(C) are of a character which, if expended incident to the creation of a partnership having an ascertainable life, would be amortized over such life.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Capitalization of expenditures** Except as otherwise provided in this section, no deduction shall be allowed for start-up expenditures.
**(b) Election to deduct**
(1) **Allowance of deduction** — If a taxpayer elects the application of this subsection with respect to any start-up expenditures—
(A) the taxpayer shall be allowed a deduction for the taxable year in which the active trade or business begins in an amount equal to the lesser of—
(i) the amount of start-up expenditures with respect to the active trade or business, or
(ii) $5,000, reduced (but not below zero) by the amount by which such start-up expenditures exceed $50,000, and
(B) the remainder of such start-up expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the active trade or business begins.
(2) **Dispositions before close of amortization period** — In any case in which a trade or business is completely disposed of by the taxpayer before the end of the period to which paragraph (1) applies, any deferred expenses attributable to such trade or business which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.
(3) **Special rule for taxable years beginning in 2010** — In the case of a taxable year beginning in 2010, paragraph (1)(A)(ii) shall be applied—
(A) by substituting “$10,000” for “$5,000”, and
(B) by substituting “$60,000” for “$50,000”.
**(c) Definitions** For purposes of this section—
(1) **Start-up expenditures** — The term “start-up expenditure” means any amount—
(A) paid or incurred in connection with—
(i) investigating the creation or acquisition of an active trade or business, or
(ii) creating an active trade or business,
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 195
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Limitation based on amount of tax** The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the sum of—
(1) the taxpayer’s regular tax liability for the taxable year reduced by the foreign tax credit allowable under section 27, and
(2) the tax imposed by section 55(a) for the taxable year.
**(b) Regular tax liability** For purposes of this part—
(1) **In general** — The term “regular tax liability” means the tax imposed by this chapter for the taxable year.
(2) **Exception for certain taxes** — For purposes of paragraph (1), any tax imposed by any of the following provisions shall not be treated as tax imposed by this chapter:
(A) section 55 (relating to minimum tax),
(B) section 59A (relating to base erosion and anti-abuse tax),
(C) subsection (m)(5)(B), (q), (t), or (v) of section 72 (relating to additional taxes on certain distributions),
(D) section 143(m) (relating to recapture of proration of Federal subsidy from use of mortgage bonds and mortgage credit certificates),
(E) section 530(d)(4) (relating to additional tax on certain distributions from Coverdell education savings accounts),
(F) section 531 (relating to accumulated earnings tax),
(G) section 541 (relating to personal holding company tax),
(H) section 1351(d)(1) (relating to recoveries of foreign expropriation losses),
(I) section 1374 (relating to tax on certain built-in gains of S corporations),
(J) section 1375 (relating to tax imposed when passive investment income of corporation having subchapter C earnings and profits exceeds 25 percent of gross receipts),
(K) subparagraph (A) of section 7518(g)(6) (relating to nonqualified withdrawals from capital construction funds taxed at highest marginal rate),
(L) sections 87
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 26
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Effect of partnership agreement** A partner’s distributive share of income, gain, loss, deduction, or credit shall, except as otherwise provided in this chapter, be determined by the partnership agreement.
**(b) Determination of distributive share** A partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof) shall be determined in accordance with the partner’s interest in the partnership (determined by taking into account all facts and circumstances), if—
(1) the partnership agreement does not provide as to the partner’s distributive share of income, gain, loss, deduction, or credit (or item thereof), or
(2) the allocation to a partner under the agreement of income, gain, loss, deduction, or credit (or item thereof) does not have substantial economic effect.
**(c) Contributed property**
(1) **In general** — Under regulations prescribed by the Secretary—
(A) income, gain, loss, and deduction with respect to property contributed to the partnership by a partner shall be shared among the partners so as to take account of the variation between the basis of the property to the partnership and its fair market value at the time of contribution,
(B) if any property so contributed is distributed (directly or indirectly) by the partnership (other than to the contributing partner) within 7 years of being contributed—
(i) the contributing partner shall be treated as recognizing gain or loss (as the case may be) from the sale of such property in an amount equal to the gain or loss which would have been allocated to such partner under subparagraph (A) by reason of the variation described in subparagraph (A) if the property had been sold at its fair market value at the time of the distribution,
(ii) the character of such gain
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 704
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Treatment as expenses** A taxpayer may elect to treat the cost of any section 179 property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the section 179 property is placed in service.
**(b) Limitations**
(1) **Dollar limitation** — The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $2,500,000.
(2) **Reduction in limitation** — The limitation under paragraph (1) for any taxable year shall be reduced (but not below zero) by the amount by which the cost of section 179 property placed in service during such taxable year exceeds $4,000,000.
(3) **Limitation based on income from trade or business**
(A) *In general* — The amount allowed as a deduction under subsection (a) for any taxable year (determined after the application of paragraphs (1) and (2)) shall not exceed the aggregate amount of taxable income of the taxpayer for such taxable year which is derived from the active conduct by the taxpayer of any trade or business during such taxable year.
(B) *Carryover of disallowed deduction* — The amount allowable as a deduction under subsection (a) for any taxable year shall be increased by the lesser of—
(i) the aggregate amount disallowed under subparagraph (A) for all prior taxable years (to the extent not previously allowed as a deduction by reason of this subparagraph), or
(ii) the excess (if any) of—
(I) the limitation of paragraphs (1) and (2) (or if lesser, the aggregate amount of taxable income referred to in subparagraph (A)), over
(II) the amount allowable as a deduction under subsection (a) for such taxable year without regard to this subparagraph.
(C) *Computation of taxab
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 179
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Year in which partnership income is includible** In computing the taxable income of a partner for a taxable year, the inclusions required by section 702 and section 707(c) with respect to a partnership shall be based on the income, gain, loss, deduction, or credit of the partnership for any taxable year of the partnership ending within or with the taxable year of the partner.
**(b) Taxable year**
(1) **Partnership’s taxable year**
(A) *Partnership treated as taxpayer* — The taxable year of a partnership shall be determined as though the partnership were a taxpayer.
(B) *Taxable year determined by reference to partners* — Except as provided in subparagraph (C), a partnership shall not have a taxable year other than—
(i) the majority interest taxable year (as defined in paragraph (4)),
(ii) if there is no taxable year described in clause (i), the taxable year of all the principal partners of the partnership, or
(iii) if there is no taxable year described in clause (i) or (ii), the calendar year unless the Secretary by regulations prescribes another period.
(C) *Business purpose* — A partnership may have a taxable year not described in subparagraph (B) if it establishes, to the satisfaction of the Secretary, a business purpose therefor. For purposes of this subparagraph, any deferral of income to partners shall not be treated as a business purpose.
(2) **Partner’s taxable year** — A partner may not change to a taxable year other than that of a partnership in which he is a principal partner unless he establishes, to the satisfaction of the Secretary, a business purpose therefor.
(3) **Principal partner** — For the purpose of this subsection, a principal partner is a partner having an interest of 5 percent or more in partnership profits or c
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 706
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Partner not acting in capacity as partner**
(1) **In general** — If a partner engages in a transaction with a partnership other than in his capacity as a member of such partnership, the transaction shall, except as otherwise provided in this section, be considered as occurring between the partnership and one who is not a partner.
(2) **Treatment of payments to partners for property or services** — Except as provided by the Secretary—
(A) *Treatment of certain services and transfers of property* — If—
(i) a partner performs services for a partnership or transfers property to a partnership,
(ii) there is a related direct or indirect allocation and distribution to such partner, and
(iii) the performance of such services (or such transfer) and the allocation and distribution, when viewed together, are properly characterized as a transaction occurring between the partnership and a partner acting other than in his capacity as a member of the partnership,
such allocation and distribution shall be treated as a transaction described in paragraph (1).
(B) *Treatment of certain property transfers* — If—
(i) there is a direct or indirect transfer of money or other property by a partner to a partnership,
(ii) there is a related direct or indirect transfer of money or other property by the partnership to such partner (or another partner), and
(iii) the transfers described in clauses (i) and (ii), when viewed together, are properly characterized as a sale or exchange of property,
such transfers shall be treated either as a transaction described in paragraph (1) or as a transaction between 2 or more partners acting other than in their capacity as members of the partnership.
**(b) Certain sales or exchanges of property with respect to
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 707
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Partnership** For purposes of this subtitle, the term “partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a corporation or a trust or estate. Under regulations the Secretary may, at the election of all the members of an unincorporated organization, exclude such organization from the application of all or part of this subchapter, if it is availed of—
(1) for investment purposes only and not for the active conduct of a business,
(2) for the joint production, extraction, or use of property, but not for the purpose of selling services or property produced or extracted, or
(3) by dealers in securities for a short period for the purpose of underwriting, selling, or distributing a particular issue of securities,
if the income of the members of the organization may be adequately determined without the computation of partnership taxable income.
**(b) Partner** For purposes of this subtitle, the term “partner” means a member of a partnership. In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.
**(c) Partnership agreement** For purposes of this subchapter, a partnership agreement includes any modifications of the partnership agreement made prior to, or at, the time prescribed by law for the filing of the partnership return for the taxable year (not including extensions) which are agreed to by all the partners, or which are adopted in such other manner as may be provide
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 761
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Federal law — U.S. Code and appendices · legal_authorities
Page 1873
TITLE 26—INTERNAL REVENUE CODE
§ 709
Pub. 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 ex-
changes after Sept. 27, 1985.
EFFECTIVE DATE OF 1984 AMENDMENT
Pub. L. 98–369, div. A, title I, § 73(b), July 18, 1984, 98
Stat. 592, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986,
100 Stat. 2095, provided that:
‘‘(1) IN
GENERAL.—The amendment made by sub-
section (a) [amending this section] shall apply—
‘‘(A) in the case of arrangements described in sec-
tion 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 amend-
ment made by subsection (a) shall not apply to a trans-
fer 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 obliga-
tions for which neither the partnership nor any part-
ner is li
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 709
Stored review status: historical_2024_not_currentness_verified. Same stored citation; legal effect and authority still require review.