# 26 U.S.C. § 702: Income and credits of partner

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s702>. Cite pinpoints as 26 U.S.C. § 702(a)(1).

## § 702(a) General rule

In determining his income tax, each partner shall take into account separately his distributive share of the partnership’s—

**§ 702(a)(1)** gains and losses from sales or exchanges of capital assets held for not more than 1 year,

**§ 702(a)(2)** gains and losses from sales or exchanges of capital assets held for more than 1 year,

**§ 702(a)(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),

**§ 702(a)(4)** charitable contributions (as defined in section 170(c)),

**§ 702(a)(5)** dividends with respect to which section 1(h)(11) or part VIII of subchapter B applies,

**§ 702(a)(6)** taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States,

**§ 702(a)(7)** other items of income, gain, loss, deduction, or credit, to the extent provided by regulations prescribed by the Secretary, and

**§ 702(a)(8)** taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection.

## § 702(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 incurred in the same manner as incurred by the partnership.

## § 702(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 distributive share of the gross income of the partnership.

## § 702(d) Cross reference

For rules relating to procedures for determining the tax treatment of partnership items see subchapter C of chapter 63 (section 6221 and following).

## Regulations

- [Treas. Reg. § 1.702-1](/26/reg/1.702-1.md): Income and credits of partner. (interprets § 702)
- [Treas. Reg. § 1.702-2](/26/reg/1.702-2.md): Net operating loss deduction of partner. (interprets § 702)
- [Treas. Reg. § 1.702-3T](/26/reg/1.702-3T.md): 4-Year spread (temporary). (interprets § 702)

## Final rules

- [86 FR 5452](https://www.federalregister.gov/documents/2021/01/19/2021-00427/guidance-under-section-1061) (2021): Guidance Under Section 1061
- [70 FR 18920](https://www.federalregister.gov/documents/2005/04/11/05-7087/residence-and-source-rules-involving-us-possessions-and-other-conforming-changes) (2005): Residence and Source Rules Involving U.S. Possessions and Other Conforming Changes
- [67 FR 48020](https://www.federalregister.gov/documents/2002/07/23/02-18453/guidance-under-subpart-f-relating-to-partnerships) (2002): Guidance Under Subpart F Relating to Partnerships

## Leading cases

- [Brannen v. Commissioner, 78 T.C. 471 (1982)](https://www.courtlistener.com/opinion/4705538/brannen-v-commissioner/)
- [Gershkowitz v. Commissioner, 88 T.C. 984 (1987)](https://www.courtlistener.com/opinion/4706456/gershkowitz-v-commissioner/)

## Connections

Cites: § 1 Tax imposed; § 170 Charitable, etc., contributions and gifts; § 901 Taxes of foreign countries and of possessions of United States; § 1231 Property used in the trade or business and involuntary conversions; § 6221 Determination at partnership level

Cited by: § 170 Charitable, etc., contributions and gifts; § 703 Partnership computations; § 704 Partner’s distributive share; § 706 Taxable years of partner and partnership; § 1366 Pass-thru of items to shareholders; § 1402 Definitions; § 6225 Partnership adjustment by Secretary; § 7519 Required payments for entities electing not to have required taxable year

Derived from: 1939 § 181; 1939 § 182; 1939 § 183(a), (b); 1939 § 183(c); 1939 § 184; 1939 § 186; 1939 § 189

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 239
- 1964-02-26: [Pub. L. 88-272](/26/act/88-272.md), 78 Stat. 32
- 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1732
- 1980-04-02: [Pub. L. 96-223](/26/act/96-223.md), 94 Stat. 307
- 1981-08-13: [Pub. L. 97-34](/26/act/97-34.md), 95 Stat. 270
- 1982-09-03: [Pub. L. 97-248](/26/act/97-248.md), 96 Stat. 667
- 1983-01-12: [Pub. L. 97-448](/26/act/97-448.md), 96 Stat. 2375
- 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 1011
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2250
- 2003-05-28: [Pub. L. 108-27](/26/act/108-27.md), 117 Stat. 764