Title 26 — Internal Revenue Code
Part III · Chapter 1 — Normal Taxes and Surtaxes
§ 761. Terms defined
Statutory text
Partnership
For purposes of this subtitle, the term “partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a corporation or a trust or estate. Under regulations the Secretary may, at the election of all the members of an unincorporated organization, exclude such organization from the application of all or part of this subchapter, if it is availed of—
for investment purposes only and not for the active conduct of a business,
for the joint production, extraction, or use of property, but not for the purpose of selling services or property produced or extracted, or
by dealers in securities for a short period for the purpose of underwriting, selling, or distributing a particular issue of securities,
if the income of the members of the organization may be adequately determined without the computation of partnership taxable income.
Partner
For purposes of this subtitle, the term “partner” means a member of a partnership. In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.
Partnership agreement
For purposes of this subchapter, a partnership agreement includes any modifications of the partnership agreement made prior to, or at, the time prescribed by law for the filing of the partnership return for the taxable year (not including extensions) which are agreed to by all the partners, or which are adopted in such other manner as may be provided by the partnership agreement.
Liquidation of a partner’s interest
For purposes of this subchapter, the term “liquidation of a partner’s interest” means the termination of a partner’s entire interest in a partnership by means of a distribution, or a series of distributions, to the partner by the partnership.
Distributions of partnership interests treated as exchanges
Except as otherwise provided in regulations, for purposes of—
section 708 (relating to continuation of partnership),
section 743 (relating to optional adjustment to basis of partnership property), and
any other provision of this subchapter specified in regulations prescribed by the Secretary,
any distribution of an interest in a partnership (not otherwise treated as an exchange) shall be treated as an exchange.
Qualified joint venture
In general
In the case of a qualified joint venture conducted by a husband and wife who file a joint return for the taxable year, for purposes of this title—
such joint venture shall not be treated as a partnership,
all items of income, gain, loss, deduction, and credit shall be divided between the spouses in accordance with their respective interests in the venture, and
each spouse shall take into account such spouse’s respective share of such items as if they were attributable to a trade or business conducted by such spouse as a sole proprietor.
Qualified joint venture
For purposes of paragraph (1), the term “qualified joint venture” means any joint venture involving the conduct of a trade or business if—
the only members of such joint venture are a husband and wife,
both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and
both spouses elect the application of this subsection.
Cross reference
For rules in the case of the sale, exchange, liquidation, or reduction of a partner’s interest, see sections 704(b) and 706(c)(2).
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. 252 · 68A Stat. 252
Enacted · 26 U.S.C. § 761
Aug. 16, 1954, ch. 736, 68A Stat. 252
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 252Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 761(a)
Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.Pub. L. 94–455 § 213(c)(3)(B) · 90 Stat. 1520
Added · 26 U.S.C. § 761(e)
Pub. L. 94–455, § 213(c)(3)(B), added subsec. (e)
Source evidence
Code amendment note
Subsec. (e). Pub. L. 94–455, § 213(c)(3)(B), added subsec. (e).Enacted provision · exact public law section
(B) Section 761 (relating to terms defined) is amended by adding at the end thereof the following: “(e) Cross Reference.— “For rules in the case of the sale, exchange, liquidation, or reduction of a partner’s interest, see sections 704(b) and 706(c)(2),”Technical Corrections Act of 1979
Pub. L. 96–222 title I § 102(a)(2)(C) · 94 Stat. 194
Added · 26 U.S.C. § 761(a)(3)
Pub. L. 96–222 added par. (3)
Source evidence
Code amendment note
Subsec. (a)(3). Pub. L. 96–222 added par. (3).Enacted provision · exact public law section
(C) Amendment of section 761.— Subsection (a) of section 761 (defining partnership) is amended by striking out “or” at the end of paragraph (1), by inserting “or” at the end of paragraph (2), and by inserting after paragraph (2) the following new paragraph: “(3) by dealers in securities for a short period for the purpose of underwriting, selling, or distributing a particular issue of securities,”.Tax Reform Act of 1984
Pub. L. 98–369 div. A title I § 75(b) · 98 Stat. 494
Added · 26 U.S.C. § 761(e); 26 U.S.C. § 761(f)
Pub. L. 98–369 added subsec. (e)
Redesignated · 26 U.S.C. § 761(e); 26 U.S.C. § 761(f)
Pub. L. 98–369 redesignated former subsec. (e) as (f)
Source evidence
Code amendment note
Subsecs. (e), (f). Pub. L. 98–369 added subsec. (e) and redesignated former subsec. (e) as (f).Enacted provision · exact public law section
(b) Distributions Treated as Exchanges for Purposes of Subchapter K.— 26 USC 761. Section 761 (relating to definitions) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Distributions Treated as Exchanges.— For purposes of— “(1) section 708 (relating to continuation of partnership), “(2) section 743 (relating to optional adjustment to basis of partnership property), and “(3) any other provision of this subchapter specified in regulations prescribed by the Secretary, any distribution (not otherwise treated as an exchange) shall be treated as an exchange.”Tax Reform Act of 1986
Pub. L. 99–514 title XVIII § 1805(c)(2) · 100 Stat. 2085
Substituted · 26 U.S.C. § 761(e)
Pub. L. 99–514 substituted “Distributions of partnership interests” for “Distributions” in heading
Substituted · 26 U.S.C. § 761(e)
Pub. L. 99–514 substituted “Except as otherwise provided in regulations, for purposes of” for “For purposes of” in closing provisions
Substituted · 26 U.S.C. § 761(e)
Pub. L. 99–514 substituted “any distribution of an interest in a partnership” for “any distribution” in closing provisions
Source evidence
Code amendment note
Subsec. (e). Pub. L. 99–514 substituted “Distributions of partnership interests” for “Distributions” in heading, substituted “Except as otherwise provided in regulations, for purposes of” for “For purposes of” in introductory provision, and “any distribution of an interest in a partnership” for “any distribution” in closing provisions.Enacted provision · exact public law section
(2) Clarification of section 761(e).— Subsection (e) of section 761 (relating to distributions treated as exchanges) is amended— (A) by striking out “For purposes of” and inserting in lieu thereof “Except as otherwise provided in regulations, for purposes of”, (B) by striking out “any distribution (not otherwise treated as an exchange)” and inserting in lieu thereof “any distribution of an interest in a partnership (not otherwise treated as an exchange)”, and (C) by striking out “Distributions” in the subsection heading and inserting in lieu thereof “Distributions of Partnership Interests”.Small Business and Work Opportunity Tax Act of 2007
Pub. L. 110–28 title VIII § 8215(a) · 121 Stat. 112
Added · 26 U.S.C. § 761(f); 26 U.S.C. § 761(g)
Pub. L. 110–28 added subsec. (f)
Redesignated · 26 U.S.C. § 761(f); 26 U.S.C. § 761(g)
Pub. L. 110–28 redesignated former subsec. (f) as (g)
Source evidence
Code amendment note
Subsecs. (f), (g). Pub. L. 110–28 added subsec. (f) and redesignated former subsec. (f) as (g).Enacted provision · exact public law section
(a) In General.— Section 761 (defining terms for purposes of partnerships) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: “(f) Qualified Joint Venture.— “(1) In general.— In the case of a qualified joint venture conducted by a husband and wife who file a joint return for the taxable year, for purposes of this title— “(A) such joint venture shall not be treated as a partnership, “(B) all items of income, gain, loss, deduction, and credit shall be divided between the spouses in accordance with their respective interests in the venture, and “(C) each spouse shall take into account such spouse’s respective share of such items as if they were attributable to a trade or business conducted by such spouse as a sole proprietor. “(2) Qualified joint venture.— For purposes of paragraph (1), the term ‘qualified joint venture’ means any joint venture involving the conduct of a trade or business if— “(A) the only members of such joint venture are a husband and wife, “(B) both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and “(C) both spouses elect the application of this subsection.” .<Bipartisan Budget Act of 2015>
Pub. L. 114–74 title XI § 1102(a) · 129 Stat. 584
Inserted · 26 U.S.C. § 761(b)
Pub. L. 114–74 inserted at end “In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.”
Source evidence
Code amendment note
Subsec. (b). Pub. L. 114–74 inserted at end “In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.”Enacted provision · exact public law section
(a) In General.— Section 761(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following: “In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.”.Effective date note
Amendment by Pub. L. 114–74 applicable to partnership taxable years beginning after Dec. 31, 2015, see section 1102(c) of Pub. L. 114–74, set out as a note under section 704 of this title.
11 of 12 references resolved to an enrolled provision · 1 partial
Editorial Notes
Amendments1976–2015 · 6 rounds
2015
Subsec. (b). Pub. L. 114–74 inserted at end “In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.”
2007
Subsecs. (f), (g). Pub. L. 110–28 added subsec. (f) and redesignated former subsec. (f) as (g).
1986
Subsec. (e). Pub. L. 99–514 substituted “Distributions of partnership interests” for “Distributions” in heading, substituted “Except as otherwise provided in regulations, for purposes of” for “For purposes of” in introductory provision, and “any distribution of an interest in a partnership” for “any distribution” in closing provisions.
1984
Subsecs. (e), (f). Pub. L. 98–369 added subsec. (e) and redesignated former subsec. (e) as (f).
1980
Subsec. (a)(3). Pub. L. 96–222 added par. (3).
1976
Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (e). Pub. L. 94–455, § 213(c)(3)(B), added subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Amendment by Pub. L. 114–74 applicable to partnership taxable years beginning after , see section 1102(c) of Pub. L. 114–74, set out as a note under section 704 of this title.
Effective Date of 2007 Amendment
Pub. L. 110–28, title VIII, § 8215(c), , 121 Stat. 194, provided that: “The amendments made by this section [amending this section, section 1402 of this title, and section 411 of Title 42, The Public Health and Welfare] shall apply to taxable years beginning after .”
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–369 applicable to distributions, sales, and exchanges made after , in taxable years ending after such date, see section 75(e) of Pub. L. 98–369, set out as an Effective Date note under section 386 of this title.
Effective Date of 1980 Amendment
Amendment by Pub. L. 96–222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title.
Effective Date of 1976 Amendment
Amendment by section 213(c)(3)(B) of Pub. L. 94–455 applicable in the case of partnership taxable years beginning after , see section 213(f)(1) of Pub. L. 94–455, set out as a note under section 709 of this title.
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.
Credits
1954–2015 · 7 acts
- 1954Aug. 16, 1954, ch. 736, 68A Stat. 252
- 1976Pub. L. 94–455, title II, § 213(c)(3)(B), title XIX, § 1906(b)(13)(A), , 90 Stat. 1548, 1834
- 1980Pub. L. 96–222, title I, § 102(a)(2)(C), , 94 Stat. 208
- 1984Pub. L. 98–369, div. A, title I, § 75(b), , 98 Stat. 594
- 1986Pub. L. 99–514, title XVIII, § 1805(c)(2), , 100 Stat. 2810
- 2007Pub. L. 110–28, title VIII, § 8215(a), , 121 Stat. 193
- 2015Pub. L. 114–74, title XI, § 1102(a), , 129 Stat. 638.
Show as published
(Aug. 16, 1954, ch. 736, 68A Stat. 252; Pub. L. 94–455, title II, § 213(c)(3)(B), title XIX, § 1906(b)(13)(A), , 90 Stat. 1548, 1834; Pub. L. 96–222, title I, § 102(a)(2)(C), , 94 Stat. 208; Pub. L. 98–369, div. A, title I, § 75(b), , 98 Stat. 594; Pub. L. 99–514, title XVIII, § 1805(c)(2), , 100 Stat. 2810; Pub. L. 110–28, title VIII, § 8215(a), , 121 Stat. 193; Pub. L. 114–74, title XI, § 1102(a), , 129 Stat. 638.)