# Prop. Treas. Reg. § 1.761-3: Certain option holders treated as partners.

Proposed regulation, not in force. REG-103580-02, 78 FR 8060, published 2013-02-05 <https://www.federalregister.gov/documents/2013/02/05/2013-02260/treatment-of-grantor-of-an-option-on-a-partnership-interest>. Interprets 26 U.S.C. § 761.

Par. 2. Section 1.761-3 is amended by adding paragraph (c)(1)(iv) to read as follows:

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(c) * * *

(1) * * *

(iv) An event described in paragraphs (c)(1)(iv)(A), (B), or (C) of this section, provided the event is pursuant to a plan in existence at the time of the issuance or modification of the noncompensatory option that has as a principal purpose the substantial reduction of the present value of the aggregate Federal tax liabilities of the partners and the noncompensatory option holder (under paragraph (a)(1)(ii) of this section):

(A) Issuance, transfer, or modification of an interest in, or liquidation of, the issuing partnership;

(B) Issuance, transfer, or modification of an interest in any look-through entity (as defined in paragraph (b)(1) of this section) that directly, or indirectly through one or more look-through entities, owns the noncompensatory option;

(C) Issuance, transfer, or modification of an interest in any look-through entity that directly, or indirectly through one or more look-through entities, owns an interest in the issuing partnership.

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