Page:United States Statutes at Large Volume 98 Part 1.djvu/639

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 591

year of a partnership shall be determined without regard to subsection (c)(2)(A)." (b) CONFORMING AMENDMENTS.—Paragraph (2) of section 706(c) is

26 USC 706.

amended— (1) by striking out the last sentence of subparagraph (A), and (2) by striking out ", but such partner's distributive share of items described in section 702(a) shall be determined by taking into account his varying interests in the partnership during the taxable year" in subparagraph (B). (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 706 note. apply— (1) in the case of items described in section 706(d)(2) of the Internal Revenue Code of 1954 (as added by subsection (a)), to Ante, p. 589. amounts attributable to periods after March 31, 1984, and (2) in the case of items described in section 706(d)(3) of such Code (as added by subsection (a)), to amounts paid or accrued by the other partnership after March 31, 1984. SEC. 73. PAYMENTS TO PARTNERS FOR PROPERTY OR CERTAIN SERVICES.

(a) GENERAL RULE.—Subsection (a) of section 707 (relating to transactions between partner and partnership) is amended to read as follows:

26 USC 707.

"(a) PARTNER NOT ACTING IN CAPACITY AS PARTNER.—

"(1) IN GENERAL.—If a partner engages in a transaction with a partnership other than in his capacity as a member of such partnership, the transaction shall, except as otherwise provided in this section, be considered as occurring between the partnership and one who is not a partner. "(2) TREATMENT OF PAYMENTS TO PARTNERS FOR PROPERTY OR

SERVICES.—Under regulations prescribed by the Secretary— "(A) TREATMENT OF CERTAIN SERVICES AND TRANSFERS OF PROPERTY.—If —

"(i) a partner performs services for a partnership or transfers property to a partnership, "(ii) there is a related direct or indirect allocation ^ and distribution to such partner, and "(iii) the performance of such services (or such transfer) and the allocation and distribution, when viewed together, are properly characterized as a transaction occurring between the partnership and a partner acting other than in his capacity as a member of the partnership, such allocation and distribution shall be treated as a transaction described in paragraph (1).

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"(B) TREATMENT OF CERTAIN PROPERTY TRANSFERS.—If— ^flfc

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"(i) there is a direct or indirect transfer of money or other property by a partner to a partnership, "(ii) there is a related direct or indirect transfer of money or other property by the partnership to such partner (or another partner), and "(iii) the transfers described in clauses (i) and (ii), when viewed together, are properly characterized as a sale of property, such transfers shall be treated either as a transaction described in paragraph (1) or as a transaction between 2 or more partners acting other than in their capacity as members of the partnership."

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