2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1013 - Other Special Taxpayers (§§ 30501 — 30622) › Subchapter D - Special Partnerships and Partners (§§ 30551 — 30578) › § 30555 - Taxable year of special partnerships and their partners

(a) Special partnership. — A special partnership may adopt any taxable year regardless of its partners’ taxable year. It may also change its taxable year pursuant to the provisions of § 30180 of this title and all other rules as established by the Secretary.
(b) Partners. — A partner may adopt any taxable year regardless of the special partnership’s taxable year, and may change his/her taxable year pursuant to the provisions of § 30180 of this title and all other rules as established by the Secretary.
(c) Close of special partnership’s taxable year. —
(1) General rule. — Except in case of termination of a special partnership and, except as provided in clause (2) of this subsection, a special partnership’s taxable year shall not close as a result of the death of a partner, entry of a new partner, the liquidation of a partner’s interest in the special partnership, or the sale or exchange of a partner’s interest in the partnership.
(2) Partner who retires or sells interest in the special partnership. —
(A) Disposition of entire interest. — The taxable year of a special partnership shall close:
(i) With respect to a partner who sells or exchanges his/her entire interest in the special partnership, and
(ii) with respect to a partner whose interest is liquidated, except that the taxable year of a special partnership with respect to a partner who dies shall not end prior to the close of the special partnership’s taxable year.
(B) Disposition of less than entire interest. — The taxable year of a special partnership shall not be deemed to be closed with respect to a partner who sells or exchanges less than his/her entire interest in the special partnership or with respect to a partner whose interest is reduced by entry of a new partner, partial liquidation of a partner’s interest in the special partnership, gift of a portion of such interest, or otherwise.
(d) Determination of distributive share when partner’s interest changes. —
(1) In general. — Except as provided in clauses (2) and (3), if during any taxable year of the special partnership there is any change in any partner’s interest in the special partnership, each partner’s distributive share of any item of income, gain, loss, or credit of the special partnership described in § 30556 of this title for such taxable year shall be determined by the use of any method prescribed by the Secretary through regulation which takes into account the varying interests of the partners in the special partnership for such taxable year.
(2) Certain cash basis items prorated over a period of time to which attributable. —
(A) In general. — If during any taxable year of the special partnership there is a change in any partner’s interest in the special partnership (except to the extent provided in regulations), each partner’s distributive share of any allocable cash basis item shall be determined:
(i) By assigning the appropriate portion of such item to each day in the period to which it is attributable, and
(ii) by allocating the portion assigned to any such day among the partners in proportion to their interests in the partnership at the close of such day.
(B) Cash basis items. — For purposes of this clause, the term “cash basis item” means any of the items described in § 30556(a) of this title with respect to which the partnership uses the cash receipts and disbursements method.
(C) Items attributable to periods not within taxable year. — If any portion of any cash basis item is attributable to:
(i) Any period before the beginning of the taxable year, such portion shall be assigned under paragraph (A)(i) to the first day of the taxable year, or
(ii) any period after the close of the taxable year, such portion shall be assigned under paragraph (A)(i) to the last day of the taxable year.
(D) Treatment of deductible items attributable to prior periods. — If any portion of a deductible cash basis item is assigned under paragraph (C)(i) to the first day of the taxable year:
(i) Such portion shall be allocated among persons who are partners in the special partnership during the period to which such portion is attributable in accordance with their varying interests during such period, and
(ii) amount assigned under subparagraph (i) to a person who is not a partner in the special partnership on such first day shall be capitalized by the partnership and treated in the manner provided in regulations.
(3) Items attributable to interest in multi-tiered partnerships. — If:
(A) During any taxable year of the special partnership there is a change in any partner’s interest in the special partnership (hereinafter in this paragraph referred to as “upper tier special partnership”), and
(B) such special partnership is a partner in another special partnership (hereinafter in this clause referred to as “lower tier special partnership”), then (except to the extent provided in regulations) each partner’s distributive share of any item of the upper tier special partnership attributable to the lower tier special partnership shall be determined by assigning the appropriate portion (determined by applying principles similar to the principles of paragraphs (C) and (D) of clause (2)) of each such item to the number of days during which the upper tier special partnership is a partner in the lower tier special partnership and by allocating the portion assigned to any such day among the partners in proportion to their interests in the upper tier special partnership at the close of such day.
(4) Taxable year determined without regard to subsection (c)(2)(A).— For purposes of this subsection, the taxable year of a special partnership shall be determined without regard to subsection (c)(2)(A).
History —Jan. 31, 2011, No. 1, § 1114.05, retroactive to Jan. 1, 2011.