Internal Revenue Code · 26 U.S.C.
§ 721. Nonrecognition of gain or loss on contribution
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. § 721
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 4, 1976 by Pub. L. 94–455
- Last amended
- August 5, 1997 by Pub. L. 105–34
- Amendments
- 1 dated changes in the source credit
- Length
- 4 subsections · 184 words · about 1 min to read
- Cross-references
- cites 2; cited by 4 Code sections and 51 other regulations
- Regulations
- 9 issued under this section
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.
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.
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.
For regulatory authority to treat intangibles transferred to a partnership as sold, see section 367(d)(3).
(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.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 721
- § 1.721-1 Nonrecognition of gain or loss on contribution.
- § 1.721(c)-1 Overview, definitions, and rules of general application.
- § 1.721(c)-2 Recognition of gain on certain contributions of property to partnerships with related foreign partners.
- § 1.721(c)-3 Gain deferral method.
- § 1.721(c)-4 Acceleration events.
- § 1.721(c)-5 Acceleration event exceptions.
- § 1.721(c)-6 Procedural and reporting requirements.
- § 1.721(c)-7 Examples.
- § 1.721-2 Noncompensatory options.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 2 other sections
Cited by 4 Code sections
- § 447(e)(3)(B) Method of accounting for corporations engaged in farming
- § 722 Basis of contributing partner’s interest
- § 723 Basis of property contributed to partnership
- § 6038B(a)(1)(B) Notice of certain transfers to foreign persons
Cited in 51 regulations not issued under it
- § 1.56(g)-1 Adjusted current earnings.
- § 1.61-6 Gains derived from dealings in property.
- § 1.108(i)-1 Deferred discharge of indebtedness income and deferred original issue discount deductions of C corporations.
- § 1.108(i)-2 Application of section 108(i) to partnerships and S corporations.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.197-2 Amortization of goodwill and certain other intangibles.
- § 1.263(a)-5 Amounts paid or incurred to facilitate an acquisition of a trade or business, a change in the capital structure of a business entity, and certain other transactions.
- § 1.267(f)-1 Controlled groups.
- § 1.367(a)-8 Gain recognition agreement requirements.
- § 1.451-3 Timing of income inclusion for taxpayers with an applicable financial statement using an accrual method of accounting.
- § 1.453-9 Gain or loss on disposition of installment obligations.
- § 1.460-4 Methods of accounting for long-term contracts.
- § 1.617-4 Treatment of gain from disposition of certain mining property.
- § 1.701-2 Anti-abuse rule.
- § 1.704-1 Partner's distributive share.
- § 1.704-3 Contributed property.
- § 1.704-4 Distribution of contributed property.
- § 1.707-3 Disguised sales of property to partnership; general rules.
- § 1.707-4 Disguised sales of property to partnership; special rules applicable to guaranteed payments, preferred returns, operating cash flow distributions, and reimbursements of preformation expenditures.
- § 1.722-1 Basis of contributing partner's interest.
- § 1.723-1 Basis of property contributed to partnership.
- § 1.737-2 Exceptions and special rules.
- § 1.737-4 Anti-abuse rule.
- § 1.743-1 Optional adjustment to basis of partnership property.
Show 27 more
- § 1.752-6 Partnership assumption of partner's section 358(h)(3) liability after October 18, 1999, and before June 24, 2003.
- § 1.752-7 Partnership assumption of partner's § 1.752-7 liability on or after June 24, 2003.
- § 1.755-1 Rules for allocation of basis.
- § 1.865-1 Loss with respect to personal property other than stock.
- § 1.865-2 Loss with respect to stock.
- § 1.897-6T Nonrecognition exchanges applicable to corporations, their shareholders, and other taxpayers, and certain transfers of property in corporate reorganizations (temporary).
- § 1.1045-1 Application to partnerships.
- § 1.1061-5 Section 1061(d) transfers to related persons.
- § 1.1245-4 Exceptions and limitations.
- § 1.1250-3 Exceptions and limitations.
- § 1.1252-2 Special rules.
- § 1.1254-2 Exceptions and limitations.
- § 1.1254-5 Special rules for partnerships and their partners.
- § 1.1361-5 Termination of QSub election.
- § 1.1374-10 Effective date and additional rules.
- § 1.1400Z2(b)-1 Inclusion of gains that have been deferred under section 1400Z-2(a).
- § 1.1400Z2(c)-1 Investments held for at least 10 years.
- § 1.1502-13 Intercompany transactions.
- § 1.1502-14Z Application of opportunity zone rules to members of a consolidated group.
- § 1.1502-35 Transfers of subsidiary stock and deconsolidations of subsidiaries.
- § 1.1502-36 Unified loss rule.
- § 1.6011-18 Certain partnership related-party basis adjustment transactions as transactions of interest.
- § 1.6038-3 Information returns required of certain United States persons with respect to controlled foreign partnerships (CFPs).
- § 1.6038B-2 Reporting of certain transfers to foreign partnerships.
- § 1.6046A-1 Return requirement for United States persons who acquire or dispose of an interest in a foreign partnership, or whose proportional interest in a foreign partnership changes substantially.
- § 301.6231(a)(3)-1 Partnership items.
- § 301.6241-7 Treatment of special enforcement matters.
Amendment history
From the source credit and the official notes, newest first.
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter K Partners and Partnerships
- Part II CONTRIBUTIONS, DISTRIBUTIONS, AND TRANSFERS
- Subpart A Contributions to a Partnership
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Codification
Another section 1131(b) of Pub. L. 105–34 enacted section 684 of this title.
Amendments
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.”