Internal Revenue Code · 26 U.S.C.
§ 734. Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction
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. § 734
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- July 18, 1984 by Pub. L. 98–369
- Last amended
- December 21, 2005 by Pub. L. 109–135
- Amendments
- 2 dated changes in the source credit
- Length
- 5 subsections · 468 words · about 2 min to read
- Cross-references
- cites 5; cited by 4 Code sections and 41 other regulations
- Regulations
- 2 issued under this section
The basis of partnership property shall not be adjusted as the result of a distribution of property to a partner unless the election, provided in section 754 (relating to optional adjustment to basis of partnership property), is in effect with respect to such partnership or unless there is a substantial basis reduction with respect to such distribution.
The allocation of basis among partnership properties where subsection (b) is applicable shall be made in accordance with the rules provided in section 755.
For purposes of this section, a securitization partnership (as defined in section 743(f)) shall not be treated as having a substantial basis reduction with respect to any distribution of property to a partner.
(Aug. 16, 1954, ch. 736, 68A Stat. 247; Pub. L. 98–369, div. A, title I, § 78(a), July 18, 1984, 98 Stat. 597; Pub. L. 108–357, title VIII, § 833(c)(1)–(5)(A), Oct. 22, 2004, 118 Stat. 1591, 1592; Pub. L. 109–135, title IV, § 403(bb), Dec. 21, 2005, 119 Stat. 2630.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 734
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 5 other sections
- § 754 Manner of electing optional adjustment to basis of partnership property
- § 731(a)(1) Extent of recognition of gain or loss on distribution
- § 732(a)(2) Basis of distributed property other than money
- § 755 Rules for allocation of basis
- § 743(d)(2) Special rules where section 754 election or substantial built-in loss
Cited by 4 Code sections
- § 731(c)(5) Extent of recognition of gain or loss on distribution
- § 743(d)(2) Special rules where section 754 election or substantial built-in loss
- § 754 Manner of electing optional adjustment to basis of partnership property
- § 755(a) Rules for allocation of basis
Cited in 41 regulations not issued under it
- § 1.48-12 Qualified rehabilitated building; expenditures incurred after December 31, 1981.
- § 1.59A-7 Application of base erosion and anti-abuse tax to partnerships.
- § 1.163(j)-0 Table of contents.
- § 1.163(j)-6 Application of the section 163(j) limitation to partnerships and subchapter S corporations.
- § 1.163(j)-10 Allocation of interest expense, interest income, and other items of expense and gross income to an excepted trade or business.
- § 1.168(k)-0 Table of contents.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.197-0 Table of contents.
- § 1.197-1T Certain elections for intangible property (temporary).
- § 1.197-2 Amortization of goodwill and certain other intangibles.
- § 1.199A-0 Table of contents.
- § 1.199A-2 Determination of W-2 wages and unadjusted basis immediately after acquisition of qualified property.
- § 1.250(b)-2 Qualified business asset investment (QBAI).
- § 1.355-0 Outline of sections.
- § 1.355-6 Recognition of gain on certain distributions of stock or securities in controlled corporation.
- § 1.460-4 Methods of accounting for long-term contracts.
- § 1.613A-3 Exemption for independent producers and royalty owners.
- § 1.701-2 Anti-abuse rule.
- § 1.704-1 Partner's distributive share.
- § 1.704-4 Distribution of contributed property.
- § 1.705-2 Basis adjustments coordinating sections 705 and 1032.
- § 1.721(c)-5 Acceleration event exceptions.
- § 1.731-2 Partnership distributions of marketable securities.
- § 1.732-1 Basis of distributed property other than money.
Show 17 more
- § 1.732-2 Special partnership basis of distributed property.
- § 1.737-1 Recognition of precontribution gain.
- § 1.737-3 Basis adjustments; Recovery rules.
- § 1.751-1 Unrealized receivables and inventory items.
- § 1.752-7 Partnership assumption of partner's § 1.752-7 liability on or after June 24, 2003.
- § 1.754-1 Time and manner of making election to adjust basis of partnership property.
- § 1.755-1 Rules for allocation of basis.
- § 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
- § 1.861-9 Allocation and apportionment of interest expense and rules for asset-based apportionment.
- § 1.884-1 Branch profits tax.
- § 1.901(m)-2 Covered asset acquisitions and relevant foreign assets.
- § 1.951A-3 Qualified business asset investment.
- § 1.956-4 Certain rules applicable to partnerships.
- § 1.1045-1 Application to partnerships.
- § 1.1250-5 Property with two or more elements.
- § 1.1363-2 Recapture of LIFO benefits.
- § 1.6011-18 Certain partnership related-party basis adjustment transactions as transactions of interest.
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 B Distributions by a Partnership
Nearby sections
- § 731 Extent of recognition of gain or loss on distribution
- § 732 Basis of distributed property other than money
- § 733 Basis of distributee partner’s interest
- § 734 Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction
- § 735 Character of gain or loss on disposition of distributed property
- § 736 Payments to a retiring partner or a deceased partner’s successor in interest
- § 737 Recognition of precontribution gain in case of certain distributions to contributing partner
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2005—Subsec. (a). Pub. L. 109–135, § 403(bb)(1), inserted “with respect to such distribution” before period at end.
Subsec. (b). Pub. L. 109–135, § 403(bb)(2), reenacted heading without change and amended introductory provisions generally. Prior to amendment, introductory provisions read as follows: “In the case of a distribution of property to a partner, a partnership, with respect to which the election provided in section 754 is in effect or unless there is a substantial basis reduction, shall—”.
2004—Pub. L. 108–357, § 833(c)(5)(A), substituted “Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction” for “Optional adjustment to basis of undistributed partnership property” in section catchline.
Subsec. (a). Pub. L. 108–357, § 833(c)(1), inserted “or unless there is a substantial basis reduction” before period at end.
Subsec. (b). Pub. L. 108–357, § 833(c)(2), inserted “or unless there is a substantial basis reduction” after “section 754 is in effect” in introductory provisions.
Subsec. (d). Pub. L. 108–357, § 833(c)(3), added subsec. (d).
Subsec. (e). Pub. L. 108–357, § 833(c)(4), added subsec. (e).
1984—Subsec. (b). Pub. L. 98–369 inserted at end “Paragraph (1)(B) shall not apply to any distributed property which is an interest in another partnership with respect to which the election provided in section 754 is not in effect.”
Statutory Notes and Related Subsidiaries
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
Pub. L. 108–357, title VIII, § 833(d)(3), Oct. 22, 2004, 118 Stat. 1592, provided that: “The amendments made by subsection (c) [amending this section] shall apply to distributions after the date of the enactment of this Act [Oct. 22, 2004].”
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title I, § 78(b), July 18, 1984, 98 Stat. 597, provided that: “The amendment made by subsection (a) [amending this section] shall apply to distributions after March 1, 1984, in taxable years ending after such date.”