26 USC § 702 - Income and credits of partner

(a) General rule

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

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

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

(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),

(4) charitable contributions (as defined in section 170 (c)),

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

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

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

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

(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.

(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.

(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).

Source

(Aug. 16, 1954, ch. 736, 68A Stat. 239; Pub. L. 88–272, title II, § 201(d)(7),Feb. 26, 1964, 78 Stat. 32; Pub. L. 94–455, title XIV, § 1402(b)(1)(L), (2), title XIX, §§ 1901(b)(1)(I)(i), (ii), 1906(b)(13)(A),Oct. 4, 1976, 90 Stat. 1732, 1791, 1834; Pub. L. 96–223, title IV, § 404(b)(5),Apr. 2, 1980, 94 Stat. 307; Pub. L. 97–34, title III, § 301(b)(5), (6)(C),Aug. 13, 1981, 95 Stat. 270; Pub. L. 97–248, title IV, § 402(c)(1),Sept. 3, 1982, 96 Stat. 667; Pub. L. 97–448, title I, § 103(a)(4),Jan. 12, 1983, 96 Stat. 2375; Pub. L. 98–369, div. A, title X, § 1001(b)(9), (e),July 18, 1984, 98 Stat. 1011, 1012; Pub. L. 99–514, title VI, § 612(b)(5),Oct. 22, 1986, 100 Stat. 2250; Pub. L. 108–27, title III, § 302(e)(8),May 28, 2003, 117 Stat. 764.)

Amendment of Section

For termination of amendment by section 303 ofPub. L. 108–27, see Effective and Termination Dates of 2003 Amendment note below.

Amendments

2003—Subsec. (a)(5). Pub. L. 108–27, §§ 302(e)(8), 303, temporarily amended par. (5) generally. Prior to amendment, par. (5) read as follows: “dividends with respect to which there is a deduction under part VIII of subchapter B,”. See Effective and Termination Dates of 2003 Amendment note below.

1986—Subsec. (a)(5). Pub. L. 99–514amended par. (5) generally. Prior to amendment, par. (5) read as follows: “dividends or interest with respect to which there is an exclusion under section 116 or 128, or a deduction under part VIII of subchapter B,”.

1984—Subsec. (a)(1), (2). Pub. L. 98–369substituted “6 months” for “1 year”, applicable to property acquired after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 Amendment note below.

1983—Subsec. (a)(5). Pub. L. 97–448substituted “an exclusion under section 116 or 128,” for “provided an exclusion under section 116 or 128”.

1982—Subsec. (d). Pub. L. 97–248added subsec. (d).

1981—Subsec. (a)(5). Pub. L. 97–34, § 301(b)(6)(C), inserted reference to “interest” in heading and text which continued the amendment made by Pub. L. 96–223.

Pub. L. 97–34, § 301(b)(5), inserted “or 128” after “section 116”.

1980—Subsec. (a)(5). Pub. L. 96–223inserted “or interest” after “dividends”.

1976—Subsec. (a)(1), (2). Pub. L. 94–455, § 1402(b)(2), provided that “9 months” would be changed to “1 year”.

Pub. L. 94–455, § 1402(b)(1)(L), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977.

Subsec. (a)(7) to (9). Pub. L. 94–455, §§ 1901(b)(1)(I)(i), 1906(b)(13)(A), redesignated pars. (8) and (9) as (7) and (8), respectively, and in par. (7), as so redesignated, struck out “or his delegate” after “Secretary”. Former par. (7), which related partially tax-exempt interest on obligations of the United States or its instrumentalities, was struck out.

Subsec. (b). Pub. L. 94–455, § 1901(b)(1)(I)(ii), substituted “paragraphs (1) through (7)” for “paragraphs (1) through (8)”.

1964—Subsec. (a)(5). Pub. L. 88–272struck out “a credit under section 34,” before “an exclusion”.

Effective and Termination Dates of 2003 Amendment

Amendment by Pub. L. 108–27applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) ofPub. L. 108–27, set out as a note under section 1 of this title.

Amendment by Pub. L. 108–27inapplicable to taxable years beginning after Dec. 31, 2012, and the Internal Revenue Code of 1986 to be applied and administered to such years as if such amendment had never been enacted, see section 303 ofPub. L. 108–27, as amended, set out as a note under section 1 of this title.

Effective Date of 1986 Amendment

Amendment by Pub. L. 99–514applicable to taxable years beginning after Dec. 31, 1986, see section 612(c) ofPub. L. 99–514, set out as a note under section 301 of this title.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–369applicable to property acquired after June 22, 1984, and before Jan. 1, 1988, see section 1001(e) ofPub. L. 98–369, set out as a note under section 166 of this title.

Effective Date of 1983 Amendment

Amendment by Pub. L. 97–448effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97–34, to which such amendment relates, see section 109 ofPub. L. 97–448, set out as a note under section 1 of this title.

Effective Date of 1982 Amendment

Amendment by Pub. L. 97–248applicable to partnership taxable years beginning after Sept. 3, 1982, with provision for the applicability of the amendment to any partnership taxable year ending after Sept. 3, 1982, if the partnership, each partner, and each indirect partner requests such application and the Secretary of the Treasury or his delegate consents to such application, see section 407(a)(1), (3) ofPub. L. 97–248, set out as an Effective Date note under section 6221 of this title.

Effective Date of 1981 Amendment

Amendment by section 301(b)(5) ofPub. L. 97–34applicable to taxable years ending after Sept. 30, 1981, and amendment by section 301(b)(6)(C) ofPub. L. 97–34applicable to taxable years beginning after Dec. 31, 1981, see section 301(d) ofPub. L. 97–34, set out as a note under section 265 of this title.

Effective and Termination Dates of 1980 Amendment

Amendment by Pub. L. 96–223applicable with respect to taxable years beginning after Dec. 31, 1980, and before Jan. 1, 1982, see section 404(c) ofPub. L. 96–223, set out as a note under section 265 of this title.

Effective Date of 1976 Amendment

Section 1402(b)(1) ofPub. L. 94–455provided that the amendment made by that section is effective with respect to taxable years beginning in 1977.

Section 1402(b)(2) ofPub. L. 94–455provided that the amendment made by that section is effective with respect to taxable years beginning after Dec. 31, 1977.

Amendment by section 1901(b)(1)(I)(i), (ii) ofPub. L. 94–455effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) ofPub. L. 94–455, set out as a note under section 2 of this title.

Effective Date of 1964 Amendment

Amendment by Pub. L. 88–272applicable with respect to dividends received after Dec. 31, 1964, in taxable years ending after such date, see section 201(e) ofPub. L. 88–272, set out as a note under section 22 of this title.