26 U.S.C. § 701 — Partners, not partnership, subject to tax

Page 1863 TITLE 26—INTERNAL REVENUE CODE § 702 section 692(c) of the Internal Revenue Code of 1986 [for- merly I.R.C. 1954], the Director General of the Multi- national Force and Observers in the Sinai who died on February 15, 1984, shall be treated as if he were a civil- ian employee of the United States while he served as such Director General.’’ Subchapter K—Partners and Partnerships Part I. Determination of tax liability. II. Contributions, distributions, and transfers. III. Definitions. [IV. Repealed.] Editorial Notes AMENDMENTS 2015—Pub. L. 114–74, title XI, § 1101(b)(1), Nov. 2, 2015, 129 Stat. 625, struck out item for part IV ‘‘Special rules for electing large partnerships’’. 1997—Pub. L. 105–34, title XII, § 1221(b), Aug. 5, 1997, 111 Stat. 1008, added item for part IV. PART I—DETERMINATION OF TAX LIABILITY Sec. 701. Partners, not partnership, subject to tax. 702. Income and credits of partner. 703. Partnership computations. 704. Partner’s distributive share. 705. Determination of basis of partner’s interest. 706. Taxable years of partner and partnership. 707. Transactions between partner and partner- ship. 708. Continuation of partnership. 709. Treatment of organization and syndication fees. Editorial Notes AMENDMENTS 1976—Pub. L. 94–455, title II, § 213(b)(2), title XIX, § 1901(b)(23), Oct. 4, 1976, 90 Stat. 1547, 1798, struck out part IV ‘‘Effective date for subchapter’’ in table of parts of subchapter K of chapter 1 and added item 709. § 701. Partners, not partnership, subject to tax A partnership as such shall not be subject to the income tax imposed by this chapter. Persons carrying on business as partners shall be liable for income tax only in their separate or indi- vidual capacities. (Aug. 16, 1954, ch. 736, 68A Stat. 239.) § 702. Income and credits of partner (a) General rule In determining his income tax, each partner shall take into account separately his distribu- tive share of the partnership’s— (1) gains and losses from sales or exchanges of capital assets held for not more than 1 year, (2) gains and losses from sales or exchanges of capital assets held for more than 1 year, (3) gains and losses from sales or exchanges of property described in section 1231 (relating to certain property used in a trade or business and involuntary conversions), (4) charitable contributions (as defined in section 170(c)), (5) dividends with respect to which section 1(h)(11) or part VIII of subchapter B applies, (6) taxes, described in section 901, paid or ac- crued to foreign countries and to possessions of the United States, (7) other items of income, gain, loss, deduc- tion, or credit, to the extent provided by regu- lations prescribed by the Secretary, and (8) taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection. (b) Character of items constituting distributive share The character of any item of income, gain, loss, deduction, or credit included in a partner’s distributive share under paragraphs (1) through (7) of subsection (a) shall be determined as if such item were realized directly from the source from which realized by the partnership, or in- curred in the same manner as incurred by the partnership. (c) Gross income of a partner In any case where it is necessary to determine the gross income of a partner for purposes of this title, such amount shall include his dis- tributive share of the gross income of the part- nership. (d) Cross reference For rules relating to procedures for determining the tax treatment of partnership items see sub- chapter C of chapter 63 (section 6221 and following). (Aug. 16, 1954, ch. 736, 68A Stat. 239; Pub. L. 88–272, title II, § 201(d)(7), Feb. 26, 1964, 78 Stat. 32; Pub. L. 94–455, title XIV, § 1402(b)(1)(L), (2), title XIX, §§ 1901(b)(1)(I)(i), (ii), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1732, 1791, 1834; Pub. L. 96–223, title IV, § 404(b)(5), Apr. 2, 1980, 94 Stat. 307; Pub. L. 97–34, title III, § 301(b)(5), (6)(C), Aug. 13, 1981, 95 Stat. 270; Pub. L. 97–248, title IV, § 402(c)(1), Sept. 3, 1982, 96 Stat. 667; Pub. L. 97–448, title I, § 103(a)(4), Jan. 12, 1983, 96 Stat. 2375; Pub. L. 98–369, div. A, title X, § 1001(b)(9), (e), July 18, 1984, 98 Stat. 1011, 1012; Pub. L. 99–514, title VI, § 612(b)(5), Oct. 22, 1986, 100 Stat. 2250; Pub. L. 108–27, title III, § 302(e)(8), May 28, 2003, 117 Stat. 764.) Editorial Notes AMENDMENTS 2003—Subsec. (a)(5). Pub. L. 108–27 amended par. (5) generally. Prior to amendment, par. (5) read as follows: ‘‘dividends with respect to which there is a deduction under part VIII of subchapter B,’’. 1986—Subsec. (a)(5). Pub. L. 99–514 amended par. (5) generally. Prior to amendment, par. (5) read as follows: ‘‘dividends or interest with respect to which there is an exclusion under section 116 or 128, or a deduction under part VIII of subchapter B,’’. 1984—Subsec. (a)(1), (2). Pub. L. 98–369 substituted ‘‘6 months’’ for ‘‘1 year’’, applicable to property acquired after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 Amendment note below. 1983—Subsec. (a)(5). Pub. L. 97–448 substituted ‘‘an ex- clusion under section 116 or 128,’’ for ‘‘provided an ex- clusion under section 116 or 128’’. 1982—Subsec. (d). Pub. L. 97–248 added subsec. (d). 1981—Subsec. (a)(5). Pub. L. 97–34, § 301(b)(6)(C), in- serted reference to ‘‘interest’’ in heading and text which continued the amendment made by Pub. L. 96–223. Pub. L. 97–34, § 301(b)(5), inserted ‘‘or 128’’ after ‘‘sec- tion 116’’. 1980—Subsec. (a)(5). Pub. L. 96–223 inserted ‘‘or inter- est’’ after ‘‘dividends’’. 1976—Subsec. (a)(1), (2). Pub. L. 94–455, § 1402(b)(2), pro- vided that ‘‘9 months’’ would be changed to ‘‘1 year’’.