Page:United States Statutes at Large Volume 68A.djvu/279

 CH. 1—NORMAL TAXES AND SURTAXES

239

Subchapter K—Partners and Partnerships '

Part I. Determination of tax liability. Part II. Contributions, distributions, and transfers. Part III. Definitions. Part IV. Effective date for subchapter.

PART I—DETERMINATION OF TAX LIABILITY 7* ~%

Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec.

701. 702. 703. 704. 705. 706. 707. 708.

Partners, not partnership, subject to tax. Income and credits of partner. Partnership computations. Partner's distributive share. Determination of basis of partner's interest. Taxable years of partner and partnership. Transactions between partner and partnership. Continuation of partnership.

SEC. 701. PARTNERS, NOT PARTNERSHIP, SUBJECT TO TAX.

A partnership as such shall not be subject to the income tax imposed by this chapter. Persons carrying on business as partners shall be liable for income tax only in their separate or individual capacities. SEC. 702. INCOME AND CREDITS OF PARTNER. (a) GENERAL RULE. — I n 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 6 months, (2) gains and losses from sales or exchanges of capital assets held for more than 6 months, (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 there is provided a credit under section 34, an exclusion under section 116, or a deduction under part VIII of subchapter B, (6) taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States, (7) partially tax-exempt interest on obligations of the United States or on obligations of instrumentalities of the United States as described in section 35 or section 242 (but, if the partnership elects to amortize the premiums on bonds as provided in section 171, the amount received on such obligations shall be reduced by the reduction provided under section 171(a)(3)), (8) other items of income, gain, loss, deduction, or credit, to the extent provided by regulations prescribed by the Secretary or his delegate, and (9) taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection. 1702(a)(9)

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