Title 26 — Internal Revenue Code
Part I · Chapter 1 — Normal Taxes and Surtaxes
§ 702. Income and credits of partner
Statutory text
General rule
In determining his income tax, each partner shall take into account separately his distributive share of the partnership’s—
gains and losses from sales or exchanges of capital assets held for not more than 1 year,
gains and losses from sales or exchanges of capital assets held for more than 1 year,
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),
charitable contributions (as defined in section 170(c)),
dividends with respect to which section 1(h)(11) or part VIII of subchapter B applies,
taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States,
other items of income, gain, loss, deduction, or credit, to the extent provided by regulations prescribed by the Secretary, and
taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection.
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.
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.
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).
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Aug. 16, 1954, ch. 736, 68A Stat. 239 · 68A Stat. 239
Enacted · 26 U.S.C. § 702
Aug. 16, 1954, ch. 736, 68A Stat. 239
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 239Revenue Act of 1964
Pub. L. 88–272 title II § 201(d)(7) · 78 Stat. 19
Struck · 26 U.S.C. § 702(a)(5)
Pub. L. 88–272 struck out “a credit under section 34,” before “an exclusion”
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 88–272 struck out “a credit under section 34,” before “an exclusion”.Enacted provision · exact public law section
(7) Section 702(a) (5) is amended by striking out “a credit under section 34,” and the comma after “section 116”.Pub. L. 94–455 § 1402(b)(2) · 90 Stat. 1520
Changed · 26 U.S.C. § 702(a)(1); 26 U.S.C. § 702(a)(2)
Pub. L. 94–455, § 1402(b)(2), provided that “9 months” would be changed to “1 year”
Source evidence
Code amendment note
Subsec. (a)(1), (2). Pub. L. 94–455, § 1402(b)(2), provided that “9 months” would be changed to “1 year”.Enacted provision · exact public law section
(2) Taxable years beginning after 1977.— Effective with respect to taxable years beginning after December 31, 1977, each provision referred to in paragraph (1) is amended by striking out Ante, p. 1731. “9 months” each place it appears and inserting in lieu thereof “1 year”.Pub. L. 94–455 § 1402(b)(1)(L) · 90 Stat. 1520
Changed · 26 U.S.C. § 702(a)(1); 26 U.S.C. § 702(a)(2)
Pub. L. 94–455, § 1402(b)(1)(L), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 94–455, § 1402(b)(1)(L), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977.Enacted provision · exact public law section
(L) Paragraphs (1) and (2) of section 702(a) (relating to income and credits of partner).Pub. L. 94–455 title XIV § 1402(b)(1)(L) · 90 Stat. 1520
Redesignated · 26 U.S.C. § 702(a)(7)(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 · 26 U.S.C. § 702(a)(7)(9)
Pub. L. 94–455, §§ 1901(b)(1)(I)(i), 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Former par. (7), which related to partially tax-exempt interest on obligations of the United States or its instrumentalities, was struck out
Source evidence
Code amendment note
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 to partially tax-exempt interest on obligations of the United States or its instrumentalities, was struck out.Enacted provision · exact public law section
(L) Paragraphs (1) and (2) of section 702(a) (relating to income and credits of partner).Pub. L. 94–455 § 1901(b)(1)(I)(ii) · 90 Stat. 1520
Substituted · 26 U.S.C. § 702(b)
Pub. L. 94–455, § 1901(b)(1)(I)(ii), substituted “paragraphs (1) through (7)” for “paragraphs (1) through (8)”
Source evidence
Code amendment note
Subsec. (b). Pub. L. 94–455, § 1901(b)(1)(I)(ii), substituted “paragraphs (1) through (7)” for “paragraphs (1) through (8)”.Enacted provision · exact public law section
(ii) Section 702(b) is amended by striking out “paragraphs (1) through (8)” and inserting in lieu thereof “paragraphs (1) through (7)”.Pub. L. 96–223 title IV § 404(b)(5) · 94 Stat. 229
Inserted · 26 U.S.C. § 702(a)(5)
Pub. L. 96–223 inserted “or interest” after “dividends”
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 96–223 inserted “or interest” after “dividends”.Enacted provision · exact public law section
(5) Paragraph (5) of section 702(a) (relating to income and 26 USC 702. credits of partners) is amended by inserting “or interest” after “dividends”.Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 301(b)(6)(C) · 95 Stat. 175
Inserted · 26 U.S.C. § 702(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
Source evidence
Code amendment note
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.Enacted provision · exact public law section
(C) section 702(a)(5).Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 301(b)(5) · 95 Stat. 175
Inserted · 26 U.S.C. § 702(a)(5)
Pub. L. 97–34, § 301(b)(5), inserted “or 128” after “section 116”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 97–34, § 301(b)(5), inserted “or 128” after “section 116”.Enacted provision · exact public law section
(5) Section 702(a)(5) (relating to income and credits of partners), as in effect for taxable years beginning in 1981, is amended by inserting “or 128” after “116”.Pub. L. 97–248 title IV § 402(c)(1) · 96 Stat. 324
Added · 26 U.S.C. § 702(d)
Pub. L. 97–248 added subsec. (d)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 97–248 added subsec. (d).Enacted provision · exact public law section
(1) Section 702 (relating to income and credits of partner) is 26 USC 702. amended by inserting at the end thereof the following new subsection:Pub. L. 97–448 title I § 103(a)(4) · 96 Stat. 2365
Substituted · 26 U.S.C. § 702(a)(5)
Pub. L. 97–448 substituted “an exclusion under section 116 or 128,” for “provided an exclusion under section 116 or 128”
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 97–448 substituted “an exclusion under section 116 or 128,” for “provided an exclusion under section 116 or 128”.Enacted provision · exact public law section
(4) Paragraph (5) of section 702(a) (relating to income and 26 USC 702. credits of partner) is amended to read as follows: “(5) 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,”.Tax Reform Act of 1984
Pub. L. 98–369 div. A title X § 1001(b)(9) · 98 Stat. 494
Substituted · 26 U.S.C. § 702(a)(1); 26 U.S.C. § 702(a)(2)
Pub. L. 98–369 substituted “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
Source evidence
Code amendment note
Subsec. (a)(1), (2). Pub. L. 98–369 substituted “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.Enacted provision · exact public law section
(9) Paragraphs (1) and (2) of section 702(a) (relating to income 26 USC 702. and credits of partner).Tax Reform Act of 1986
Pub. L. 99–514 title VI § 612(b)(5) · 100 Stat. 2085
Amended · 26 U.S.C. § 702(a)(5)
Pub. L. 99–514 amended 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,”
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 99–514 amended 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,”.Enacted provision · exact public law section
(5) Paragraph (5) of section 702(a) is amended to read as follows: “(5) dividends with respect to which there is a deduction under part VIII of subchapter B,”.Pub. L. 108–27 title III § 302(e)(8) · 117 Stat. 752
Amended · 26 U.S.C. § 702(a)(5)
Pub. L. 108–27 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,”
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 108–27 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,”.Enacted provision · exact public law section
(8) Paragraph (5) of section 702(a) is amended to read as follows: “(5) dividends with respect to which section 1(h)(11) or part VIII of subchapter B applies,” .Effective date note
Amendment by Pub. L. 108–27 applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) of Pub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.
14 of 15 references resolved to an enrolled provision · 1 partial
Editorial Notes
Amendments1964–2003 · 9 rounds
2003
Subsec. (a)(5). Pub. L. 108–27 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,”.
1986
Subsec. (a)(5). Pub. L. 99–514 amended 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. 98–369 substituted “6 months” for “1 year”, applicable to property acquired after , and before . See Effective Date of 1984 Amendment note below.
1983
Subsec. (a)(5). Pub. L. 97–448 substituted “an exclusion under section 116 or 128,” for “provided an exclusion under section 116 or 128”.
1982
Subsec. (d). Pub. L. 97–248 added 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. 96–223 inserted “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 to 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. 88–272 struck out “a credit under section 34,” before “an exclusion”.
Statutory Notes and Related Subsidiaries
Effective Date of 2003 Amendment
Amendment by Pub. L. 108–27 applicable, except as otherwise provided, to taxable years beginning after , see section 302(f) of Pub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–514 applicable to taxable years beginning after , see section 612(c) of Pub. L. 99–514, set out as a note under section 301 of this title.
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–369 applicable to property acquired after , and before , see section 1001(e) of Pub. L. 98–369, set out as a note under section 166 of this title.
Effective Date of 1983 Amendment
Amendment by Pub. L. 97–448 effective, 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 of Pub. L. 97–448, set out as a note under section 1 of this title.
Effective Date of 1982 Amendment
Pub. L. 97–248, title IV, § 407(a), , 96 Stat. 670, as amended by Pub. L. 99–514, § 2, , 100 Stat. 2095, provided that:
“(1) Except as provided in paragraph (2), the amendments made by sections 402, 403, and 404 [enacting sections 6221 to 6234 of this title and section 1508 of Title 28, Judiciary and Judicial Procedure, amending this section and sections 6031, 6213, 6216, 6422, 6501, 6504, 6511, 6512, 6515, 7422, 7451, 7456, 7459, 7482, and 7485 of this title and section 1346 of Title 28, and enacting provisions set out as a note under section 6031 of this title] shall apply to partnership taxable years beginning after the date of the enactment of this Act [].
“(2) [Former] Section 6232 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall apply to periods after .
“(3) The amendments made by sections 402, 403, and 404 shall apply to any partnership taxable year (or in the case of [former] section 6232 of such Code, to any period) ending after the date of the enactment of this Act [] 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.”
Effective Date of 1981 Amendment
Amendment by section 301(b)(5) of Pub. L. 97–34 applicable to taxable years ending after , and amendment by section 301(b)(6)(C) of Pub. L. 97–34 applicable to taxable years beginning after , see section 301(d) of Pub. 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. 96–223 applicable with respect to taxable years beginning after , and before , see section 404(c) of Pub. L. 96–223, set out as a note under section 265 of this title.
Effective Date of 1976 Amendment
Pub. L. 94–455, title XIV, § 1402(b)(1), , 90 Stat. 1731, provided that the amendment made by that section is effective with respect to taxable years beginning in 1977.
Pub. L. 94–455, title XIV, § 1402(b)(2), , 90 Stat. 1732, provided that the amendment made by that section is effective with respect to taxable years beginning after .
Amendment by section 1901(b)(1)(I)(i), (ii) of Pub. L. 94–455 effective for taxable years beginning after , see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.
Effective Date of 1964 Amendment
Amendment by Pub. L. 88–272 applicable with respect to dividends received after , in taxable years ending after such date, see section 201(e) of Pub. L. 88–272, set out as a note under section 22 of this title.
Credits
1954–2003 · 10 acts
- 1954Aug. 16, 1954, ch. 736, 68A Stat. 239
- 1964Pub. L. 88–272, title II, § 201(d)(7), , 78 Stat. 32
- 1976Pub. L. 94–455, title XIV, § 1402(b)(1)(L), (2), title XIX, §§ 1901(b)(1)(I)(i), (ii), 1906(b)(13)(A), , 90 Stat. 1732, 1791, 1834
- 1980Pub. L. 96–223, title IV, § 404(b)(5), , 94 Stat. 307
- 1981Pub. L. 97–34, title III, § 301(b)(5), (6)(C), , 95 Stat. 270
- 1982Pub. L. 97–248, title IV, § 402(c)(1), , 96 Stat. 667
- 1983Pub. L. 97–448, title I, § 103(a)(4), , 96 Stat. 2375
- 1984Pub. L. 98–369, div. A, title X, § 1001(b)(9), (e), , 98 Stat. 1011, 1012
- 1986Pub. L. 99–514, title VI, § 612(b)(5), , 100 Stat. 2250
- 2003Pub. L. 108–27, title III, § 302(e)(8), , 117 Stat. 764.
Show as published
(Aug. 16, 1954, ch. 736, 68A Stat. 239; Pub. L. 88–272, title II, § 201(d)(7), , 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), , 90 Stat. 1732, 1791, 1834; Pub. L. 96–223, title IV, § 404(b)(5), , 94 Stat. 307; Pub. L. 97–34, title III, § 301(b)(5), (6)(C), , 95 Stat. 270; Pub. L. 97–248, title IV, § 402(c)(1), , 96 Stat. 667; Pub. L. 97–448, title I, § 103(a)(4), , 96 Stat. 2375; Pub. L. 98–369, div. A, title X, § 1001(b)(9), (e), , 98 Stat. 1011, 1012; Pub. L. 99–514, title VI, § 612(b)(5), , 100 Stat. 2250; Pub. L. 108–27, title III, § 302(e)(8), , 117 Stat. 764.)