26 U.S. Code § 721 - Nonrecognition of gain or loss on contribution

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


(Aug. 16, 1954, ch. 736, 68A Stat. 245; Pub. L. 94–455, title XXI, § 2131(b),Oct. 4, 1976, 90 Stat. 1924; Pub. L. 105–34, title XI, § 1131(b)(3), (5)(B),Aug. 5, 1997, 111 Stat. 979, 980.)

Another section 1131(b) ofPub. L. 105–34enacted section 684 of this title.

1997—Subsec. (c). Pub. L. 105–34, § 1131(b)(3), added subsec. (c).
Subsec. (d). Pub. L. 105–34, § 1131(b)(5)(B), added subsec. (d).
1976—Pub. L. 94–455designated existing provisions as subsec. (a), added subsec. (a) heading “General rule”, and added subsec. (b).
Effective Date of 1976 Amendment

Pub. L. 94–455, title XXI, § 2131(f)(3)–(5), Oct. 4, 1976, 90 Stat. 1924, 1925, provided that:
“(3) Except as provided in paragraph (4), the amendments made by subsections (b) and (c) [amending this section and sections 722 and 723 of this title] shall apply to transfers made after February 17, 1976, in taxable years ending after such date.
“(4) The amendments made by subsections (b) and (c) shall not apply to transfers to a partnership made on or before the 90th day after the date of the enactment of this Act [Oct. 4, 1976] if—
“(A) either—
“(i) a ruling request with respect to such transfers was filed with the Internal Revenue Service before March 27, 1976, or
“(ii) a registration statement with respect to such transfers was filed with the Securities and Exchange Commission before March 27, 1976,
“(B) the securities transferred were deposited on or before the 60th day after the date of the enactment of this Act [Oct. 4, 1976], and
“(C) either—
“(i) the aggregate value (determined as of the close of the 60th day referred to in subparagraph (B), or, if earlier, the close of the deposit period) of the securities so transferred does not exceed $100,000,000, or
“(ii) the securities transferred were all on deposit on February 29, 1976, pursuant to a registration statement referred to in subparagraph (A)(ii).
“(5) If no registration statement was required to be filed with the Securities and Exchange Commission with respect to the transfer of securities to any partnership, then paragraph (4) shall be applied to such transfers—
“(A) as if paragraph (4) did not contain subparagraph (A)(ii) thereof, and
“(B) by substituting ‘$25,000,000’ for ‘$100,000,000’ in subparagraph (C)(i) thereof.”

Written determinations for this section

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26 CFR - Internal Revenue



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