Internal Revenue Code · 26 U.S.C.
§ 737. Recognition of precontribution gain in case of certain distributions to contributing partner
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. § 737
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- October 24, 1992 by Pub. L. 102–486
- Last amended
- August 5, 1997 by Pub. L. 105–34
- Amendments
- 3 dated changes in the source credit
- Length
- 5 subsections · 486 words · about 2 min to read
- Defines
- 1 term
- Cross-references
- cites 3; cited by 2 Code sections and 4 other regulations
- Regulations
- 5 issued under this section
The adjusted basis of a partner’s interest in a partnership shall be increased by the amount of any gain recognized by such partner under subsection (a). For purposes of determining the basis of the distributed property (other than money), such increase shall be treated as occurring immediately before the distribution.
If any portion of the property distributed consists of property which had been contributed by the distributee partner to the partnership, such property shall not be taken into account under subsection (a)(1) and shall not be taken into account in determining the amount of the net precontribution gain. If the property distributed consists of an interest in an entity, the preceding sentence shall not apply to the extent that the value of such interest is attributable to property contributed to such entity after such interest had been contributed to the partnership.
This section shall not apply to the extent section 751(b) applies to such distribution.
For treatment of marketable securities as money for purposes of this section, see section 731(c).
(Added Pub. L. 102–486, title XIX, § 1937(a), Oct. 24, 1992, 106 Stat. 3032; amended Pub. L. 103–465, title VII, § 741(b), Dec. 8, 1994, 108 Stat. 5009; Pub. L. 104–188, title I, § 1704(j)(8), Aug. 20, 1996, 110 Stat. 1882; Pub. L. 105–34, title X, § 1063(a), Aug. 5, 1997, 111 Stat. 947.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 737
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 3 other sections
- § 731 Extent of recognition of gain or loss on distribution
- § 704(c)(1)(B) Partner’s distributive share
- § 751 Unrealized receivables and inventory items
Cited by 2 Code sections
- § 731(c)(1) Extent of recognition of gain or loss on distribution
- § 6103(m)(5)(B)(ii) Confidentiality and disclosure of returns and return information
Cited in 4 regulations not issued under it
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
- § 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
1997—Subsec. (b)(1). Pub. L. 105–34 substituted “7 years” for “5 years”.
1996—Pub. L. 104–188 provided that section 1937(a) of Pub. L. 102–486, shall be applied as if “Subpart B” appeared instead of “Subpart C”. Section 1937(a) of Pub. L. 102–486 directed amendment of subpart C of this part by adding this section at the end thereof.
1994—Subsec. (c)(1). Pub. L. 103–465, § 741(b)(1), amended last sentence generally. Prior to amendment, last sentence read as follows: “Except for purposes of determining the amount recognized under subsection (a), such increase shall be treated as occurring immediately before the distribution.”
Subsec. (e). Pub. L. 103–465, § 741(b)(2), added subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Amendment by Pub. L. 105–34 applicable to property contributed to a partnership after June 8, 1997, but not applicable to any property contributed pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such contribution if such contract provides for the contribution of a fixed amount of property, see section 1063(b) of Pub. L. 105–34, set out as a note under section 704 of this title.
Effective Date of 1994 Amendment
Amendment by Pub. L. 103–465 applicable to distributions after Dec. 8, 1994, and not applicable to certain distributions before Jan. 1, 1995, distributions in liquidation of partner’s interest, or distributions in complete liquidation of publicly traded partnerships, see section 741(c) of Pub. L. 103–465, set out as a note under section 731 of this title.
Effective Date
Section applicable to distributions on or after June 25, 1992, see section 1937(c) of Pub. L. 102–486, set out as an Effective Date of 1992 Amendment note under section 704 of this title.