26 U.S.C. § 721: Nonrecognition of gain or loss on contribution

§ 1.721-1 Nonrecognition of gain or loss on contribution.§ 1.721-2 Noncompensatory options.Prop. § 1.721-1 Proposed 2014 · Nonrecognition of gain or loss on contribution.

Amended 1976

1976 Pub. L. 94-455 Pub. L. 94–455 designated existing provisions as subsec. (a), added subsec. (a) heading “General rule”, and added subsec. (b).

Cases: Campbell v. Commissioner, 943 F.2d 815 (8th Cir. 1991); Diamond v. Commissioner, 492 F.2d 286 (7th Cir. 1974); Stafford v. United States, 611 F.2d 990 (5th Cir. 1980)

Forms: Form 8865; Form 1065; Form 8838-P

Final rules 5

(a) General rule No gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership.

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(b) Special rule Subsection (a) shall not apply to gain realized on a transfer of property to a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were incorporated.

Textual readingALL OF= nonrecognition under (a) not applyingGate Wizard 🧙

“gain realized on a transfer of property to a partnership”

“a partnership which would be treated as an investment company (within the meaning of section 351) if the partnership were incorporated”

Tested as if the partnership were a corporation: Reg. § 1.351-1(c)(1) applies to the hypothetical transferee

Reg. § 1.351-1(c)(1) Gate Wizard 🧙

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(c) Regulations relating to certain transfers to partnerships The Secretary may provide by regulations that subsection (a) shall not apply to gain realized on the transfer of property to a partnership if such gain, when recognized, will be includible in the gross income of a person other than a United States person.

§ 1.721(c)-1 Overview, definitions, and rules of general application.§ 1.721(c)-2 Recognition of gain on certain contributions of property to partnerships with related foreign partners.§ 1.721(c)-3 Gain deferral method.§ 1.721(c)-4 Acceleration events.§ 1.721(c)-5 Acceleration event exceptions.§ 1.721(c)-6 Procedural and reporting requirements.§ 1.721(c)-7 Examples.

Amended 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 1131(b)(3), added subsec. (c).

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(d) Transfers of intangibles For regulatory authority to treat intangibles transferred to a partnership as sold, see section 367(d)(3).

Amended 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 1131(b)(5)(B), added subsec. (d).