Internal Revenue Code · 26 U.S.C.

§ 709. Treatment of organization and syndication fees

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 709

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Added: October 4, 1976 by Pub. L. 94–455
Last amended: December 21, 2005 by Pub. L. 109–135
Amendments: 2 dated changes in the source credit
Length: 2 subsections · 313 words · about 1 min to read
Cross-references: cites 1; cited by 0 Code sections and 5 other regulations
Regulations: 2 issued under this section

¶(a) General rule

Except as provided in subsection (b), no deduction shall be allowed under this chapter to the partnership or to any partner for any amounts paid or incurred to organize a partnership or to promote the sale of (or to sell) an interest in such partnership.

¶(b) Deduction of organization fees

¶(1) Allowance of deduction If a partnership elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenses—

¶(A) the partnership shall be allowed a deduction for the taxable year in which the partnership begins business in an amount equal to the lesser of—

¶(i) the amount of organizational expenses with respect to the partnership, or

¶(ii) $5,000, reduced (but not below zero) by the amount by which such organizational expenses exceed $50,000, and

¶(B) the remainder of such organizational expenses shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the partnership begins business.

¶(2) Dispositions before close of amortization period

In any case in which a partnership is liquidated before the end of the period to which paragraph (1)(B) applies, any deferred expenses attributable to the partnership which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.

¶(3) Organizational expenses defined The organizational expenses to which paragraph (1) applies, are expenditures which—

¶(A) are incident to the creation of the partnership;

¶(B) are chargeable to capital account; and

¶(C) are of a character which, if expended incident to the creation of a partnership having an ascertainable life, would be amortized over such life.

(Added Pub. L. 94–455, title II, § 213(b)(1), Oct. 4, 1976, 90 Stat. 1547; amended Pub. L. 108–357, title VIII, § 902(c), Oct. 22, 2004, 118 Stat. 1651; Pub. L. 109–135, title IV, § 403(ll), Dec. 21, 2005, 119 Stat. 2632.)

Regulations under this section

Treasury regulations (26 CFR) issued under § 709

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 1 other section

§ 165 Losses

Cited in 5 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

December 21, 2005Amended by Pub. L. 109–135Parts changed in 2005: (b)(1)
October 22, 2004Amended by Pub. L. 108–357Parts changed in 2004: (b)
October 4, 1976Added by Pub. L. 94–455

Where it sits in the Code

Nearby sections

§ 705 Determination of basis of partner’s interest
§ 706 Taxable years of partner and partnership
§ 707 Transactions between partner and partnership
§ 708 Continuation of partnership
§ 709 Treatment of organization and syndication fees

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Editorial Notes

Amendments

2005—Subsec. (b)(1). Pub. L. 109–135 substituted “partnership” for “taxpayer” in introductory provisions and before “shall be allowed” in subpar. (A).

2004—Subsec. (b). Pub. L. 108–357 substituted “Deduction” for “Amortization” in heading, added par. (2), redesignated former par. (2) as (3), and amended heading and text of par. (1) generally. Prior to amendment, text of par. (1) read as follows: “Amounts paid or incurred to organize a partnership may, at the election of the partnership (made in accordance with regulations prescribed by the Secretary), be treated as deferred expenses. Such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the partnership (beginning with the month in which the partnership begins business), or if the partnership is liquidated before the end of such 60-month period, such deferred expenses (to the extent not deducted under this section) may be deducted to the extent provided in section 165.”

Effective Date of 2005 Amendment

Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

Effective Date of 2004 Amendment

Amendment by Pub. L. 108–357 applicable to amounts paid or incurred after Oct. 22, 2004, see section 902(d) of Pub. L. 108–357, set out as a note under section 195 of this title.

Effective Date

Pub. L. 94–455, title II, § 213(f), Oct. 4, 1976, 90 Stat. 1548, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(1) In general.— Except as otherwise provided in this subsection, the amendments made by this section [enacting this section and amending sections 179, 704, 706, 707, and 761 of this title] shall apply in the case of partnership taxable years beginning after December 31, 1975.

“(2) Subsection (e).— The amendment made by subsection (e) [amending section 704 of this title] shall apply to liabilities incurred after December 31, 1976.

“(3) Section 709(b) of the code.— Section 709(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by the amendment made by subsection (b)(1) of this section) shall apply in the case of amounts paid or incurred in taxable years beginning after December 31, 1976.”