§ 721. Nonrecognition of gain or loss on contribution

Statutory text

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.

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.

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.

Transfers of intangibles

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

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.

1954
Aug. 16, 1954, ch. 736, 68A Stat. 245 · 68A Stat. 245
Enacted · 26 U.S.C. § 721
Aug. 16, 1954, ch. 736, 68A Stat. 245
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 245
1976
Pub. L. 94–455 title XXI § 2131(b) · 90 Stat. 1520
1. Amended · 26 U.S.C. § 721
  Pub. L. 94–455 designated existing provisions as subsec. (a)
2. Added · 26 U.S.C. § 721
  Pub. L. 94–455 added subsec. (a) heading “General rule”
3. Added · 26 U.S.C. § 721
  Pub. L. 94–455 added subsec. (b)
Source evidence
Code amendment note
Pub. L. 94–455 designated existing provisions as subsec. (a), added subsec. (a) heading “General rule”, and added subsec. (b).
Enacted provision · exact public law section
(b) Partnerships.— Section 721 (relating to non recognition of gain or loss on transfers to partnerships) is amended to read as follows: “SEC. 721. NONRECOGNITION OF GAIN OR LOSS ON CONTRIBUTION. “(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 tn 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.”
Effective date note
Pub. L. 94–455, title XXI, § 2131(f)(3)–(5), Oct. 4, 1976, 90 Stat. 1924, 1925, provided that:
1997
Pub. L. 105–34 § 1131(b)(3) · 111 Stat. 788
Added · 26 U.S.C. § 721(c)
Pub. L. 105–34, § 1131(b)(3), added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 105–34, § 1131(b)(3), added subsec. (c).
Enacted provision · exact public law section
(3) Certain transfers to partnerships.— Section 721 is amended by adding at the end the following new subsection: “(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.”.
1997
Pub. L. 105–34 § 1131(b)(5)(B) · 111 Stat. 788
Added · 26 U.S.C. § 721(d)
Pub. L. 105–34, § 1131(b)(5)(B), added subsec. (d)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 105–34, § 1131(b)(5)(B), added subsec. (d).
Enacted provision · exact public law section
(B) Section 721 is amended by adding at the end the following new subsection: “(d) Transfers of Intangibles.— “For regulatory authority to treat intangibles transferred to a partnership as sold, see section 367(d)(3).”.

5 of 6 references resolved to an enrolled provision · 1 partial

Editorial Notes

Codification

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

Amendments1976–1997 · 2 rounds

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. 94–455 designated existing provisions as subsec. (a), added subsec. (a) heading “General rule”, and added subsec. (b).

Statutory Notes and Related Subsidiaries

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.”
#
#

Credits

1954–1997 · 3 acts

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

Show as published

(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.)