# Prop. Treas. Reg. § 1.1254-5: Special rules for partnerships and their partners.

Proposed regulation, not in force. REG-151416-06, 79 FR 65151, published 2014-11-03 <https://www.federalregister.gov/documents/2014/11/03/2014-25487/certain-distributions-treated-as-sales-or-exchanges>. Interprets 26 U.S.C. § 1254.

Par. 16. Section 1.1254-5 is amended by revising the introductory text of paragraph (b)(1) to read as follows:

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(b) Determination of gain treated as ordinary income under section 1254 upon the disposition of natural resource recapture property by a partnership —( 1 ) General rule. Upon a disposition of natural resource recapture property by a partnership, the amount treated as ordinary income under section 1254 is determined at the partner level. See also §§ 1.732-1(c)(2)(iii) and 1.755-1(c)(2)(iii) for rules governing the application of section 1254 to partnership property in certain situations. Each partner must recognize as ordinary income under section 1254 the lesser of—

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