Cases: Bryant v. Commissioner, 46 T.C. 848 (1966)
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(a) Partnership For purposes of this subtitle, the term “partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a corporation or a trust or estate. Under regulations the Secretary may, at the election of all the members of an unincorporated organization, exclude such organization from the application of all or part of this subchapter, if it is availed of—
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Cases: Madison Gas & Electric Co. v. Commissioner, 72 T.C. 521 (1979)
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(1) for investment purposes only and not for the active conduct of a business,
(2) for the joint production, extraction, or use of property, but not for the purpose of selling services or property produced or extracted, or
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(3) by dealers in securities for a short period for the purpose of underwriting, selling, or distributing a particular issue of securities,
Amended 1980
- 1980 Pub. L. 96-222 Pub. L. 96–222 added par. (3).
if the income of the members of the organization may be adequately determined without the computation of partnership taxable income.
(b) Partner For purposes of this subtitle, the term “partner” means a member of a partnership. In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.
Amended 2015
- 2015 Pub. L. 114-74 Pub. L. 114–74 inserted at end “In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.”
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(c) Partnership agreement For purposes of this subchapter, a partnership agreement includes any modifications of the partnership agreement made prior to, or at, the time prescribed by law for the filing of the partnership return for the taxable year (not including extensions) which are agreed to by all the partners, or which are adopted in such other manner as may be provided by the partnership agreement.
Cases: United States v. Little, 753 F.2d 1420 (9th Cir. 1985)
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(d) Liquidation of a partner’s interest For purposes of this subchapter, the term “liquidation of a partner’s interest” means the termination of a partner’s entire interest in a partnership by means of a distribution, or a series of distributions, to the partner by the partnership.
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(e) Distributions of partnership interests treated as exchanges Except as otherwise provided in regulations, for purposes of—
Amended 1976, 1984, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514 substituted “Distributions of partnership interests” for “Distributions” in heading, substituted “Except as otherwise provided in regulations, for purposes of” for “For purposes of” in introductory provision, and “any distribution of an interest in a partnership” for “any distribution” in closing provisions.
- 1984 Pub. L. 98-369 Pub. L. 98–369 added subsec. (e) and redesignated former subsec. (e) as (f).
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 213(c)(3)(B), added subsec. (e).
(1) section 708 (relating to continuation of partnership),
(2) section 743 (relating to optional adjustment to basis of partnership property), and
(3) any other provision of this subchapter specified in regulations prescribed by the Secretary,
any distribution of an interest in a partnership (not otherwise treated as an exchange) shall be treated as an exchange.
(f) Qualified joint venture
Amended 1984, 2007
- 2007 Pub. L. 110-28 Pub. L. 110–28 added subsec. (f) and redesignated former subsec. (f) as (g).
- 1984 Pub. L. 98-369 Pub. L. 98–369 added subsec. (e) and redesignated former subsec. (e) as (f).
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(1) In general In the case of a qualified joint venture conducted by a husband and wife who file a joint return for the taxable year, for purposes of this title—
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(A) such joint venture shall not be treated as a partnership,
(B) all items of income, gain, loss, deduction, and credit shall be divided between the spouses in accordance with their respective interests in the venture, and
(C) each spouse shall take into account such spouse’s respective share of such items as if they were attributable to a trade or business conducted by such spouse as a sole proprietor.
(2) Qualified joint venture For purposes of paragraph (1), the term “qualified joint venture” means any joint venture involving the conduct of a trade or business if—
(A) the only members of such joint venture are a husband and wife,
(B) both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and
(C) both spouses elect the application of this subsection.
(g) Cross reference For rules in the case of the sale, exchange, liquidation, or reduction of a partner’s interest, see sections 704(b) and 706(c)(2).
Amended 2007
- 2007 Pub. L. 110-28 Pub. L. 110–28 added subsec. (f) and redesignated former subsec. (f) as (g).