Source: https://codes.findlaw.com/us/title-26-internal-revenue-code/26-usc-sect-704.html
Timestamp: 2020-01-25 21:39:29
Document Index: 799149590

Matched Legal Cases: ['§ 704', '§ 704', '§ 704', '§ 704', '§ 704', '§ 704']

26 U.S.C. § 704 - U.S. Code Title 26. Internal Revenue Code § 704 | FindLaw
26 U.S.C. § 704 - U.S. Code - Unannotated Title 26. Internal Revenue Code § 704. Partner's distributive share
(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--
(c) Contributed property.--
(1) In general. --Under regulations prescribed by the Secretary--
(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--
(C) if any property so contributed has a built-in loss--
(2) Special rule for distributions where gain or loss would not be recognized outside partnerships. --Under regulations prescribed by the Secretary, if--
(B) other property of a like kind (within the meaning of section 1031 ) is distributed by the partnership to the contributing partner not later than the earlier of--
(3) Other rules. --Under regulations prescribed by the Secretary, rules similar to the rules of paragraph (1) shall apply to contributions by a partner (using the cash receipts and disbursements method of accounting) of accounts payable and other accrued but unpaid items. Any reference in paragraph (1) or (2) to the contributing partner shall be treated as including a reference to any successor of such partner.
(d) Limitation on allowance of losses. --A partner's distributive share of partnership loss (including capital loss) shall be allowed only to the extent of the adjusted basis of such partner's interest in the partnership at the end of the partnership year in which such loss occurred. Any excess of such loss over such basis shall be allowed as a deduction at the end of the partnership year in which such excess is repaid to the partnership.
(e) Partnership interests created by gift. --
(1) Distributive share of donee includible in gross income. --In the case of any partnership interest created by gift, the distributive share of the donee under the partnership agreement shall be includible in his gross income, except to the extent that such share is determined without allowance of reasonable compensation for services rendered to the partnership by the donor, and except to the extent that the portion of such share attributable to donated capital is proportionately greater than the share of the donor attributable to the donor's capital. The distributive share of a partner in the earnings of the partnership shall not be diminished because of absence due to military service.
(2) Purchase of interest by member of family. --For purposes of this subsection, an interest purchased by one member of a family from another shall be considered to be created by gift from the seller, and the fair market value of the purchased interest shall be considered to be donated capital. The “family” of any individual shall include only his spouse, ancestors, and lineal descendants, and any trusts for the primary benefit of such persons.
(f) Cross reference.--
For rules in the case of the sale, exchange, liquidation, or reduction of a partner's interest, see section 706(c)(2) .
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