Opinion ID: 411284
Heading Depth: 1
Heading Rank: 5

Heading: R.C. Sec. 706(c) provides as follows:

Text: Sec. 706. Taxable Years of Partner and Partnership. (c) Closing of Partnership Year. (1) General Rule. Except in the case of a termination of a partnership and except as provided in paragraph (2) of this subsection, the taxable year of a partnership shall not close as the result of the death of a partner, the entry of a new partner, the liquidation of a partner's interest in the partnership, or the sale or exchange of a partner's interest in the partnership. (2) Partner Who Retires or Sells Interest in Partnership. (A) Disposition of Entire Interest. The taxable year of a partnership shall close-- (i) with respect to a partner who sells or exchanges his entire interest in a partnership, and (ii) with respect to a partner whose interest is liquidated, except that the taxable year of a partnership with respect to a partner who dies shall not close prior to the end of the partnership's taxable year. Such partner's distributive share of items described in section 702(a) for such year shall be determined, under regulations prescribed by the Secretary or his delegate, for the period ending with such sale, exchange, or liquidation. (B) Disposition of Less Than Entire Interest. The taxable year of a partnership shall not close (other than at the end of a partnership's taxable year as determined under subsection (b)(1)) with respect to a partner who sells or exchanges less than his entire interest in the partnership or with respect to a partner whose interest is reduced, but such partner's distributive share of items described in section 702(a) shall be determined by taking into account his varying interests in the partnership during the taxable year. 4