Internal Revenue Code · 26 U.S.C.

§ 761. Terms defined

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. § 761

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: November 2, 2015 by Pub. L. 114–74
Amendments: 5 dated changes in the source credit
Length: 7 subsections · 705 words · about 3 min to read
Defines: 4 terms
Cross-references: cites 5; cited by 3 Code sections and 21 other regulations
Regulations: 3 issued under this section

¶(a) Partnership For purposes of this subtitle, the term “partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a corporation or a trust or estate. Under regulations the Secretary may, at the election of all the members of an unincorporated organization, exclude such organization from the application of all or part of this subchapter, if it is availed of—

¶(1) for investment purposes only and not for the active conduct of a business,

¶(2) for the joint production, extraction, or use of property, but not for the purpose of selling services or property produced or extracted, or

¶(3) by dealers in securities for a short period for the purpose of underwriting, selling, or distributing a particular issue of securities,

if the income of the members of the organization may be adequately determined without the computation of partnership taxable income.

¶(b) Partner

For purposes of this subtitle, the term “partner” means a member of a partnership. In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.

¶(c) Partnership agreement

For purposes of this subchapter, a partnership agreement includes any modifications of the partnership agreement made prior to, or at, the time prescribed by law for the filing of the partnership return for the taxable year (not including extensions) which are agreed to by all the partners, or which are adopted in such other manner as may be provided by the partnership agreement.

¶(d) Liquidation of a partner’s interest

For purposes of this subchapter, the term “liquidation of a partner’s interest” means the termination of a partner’s entire interest in a partnership by means of a distribution, or a series of distributions, to the partner by the partnership.

¶(e) Distributions of partnership interests treated as exchanges Except as otherwise provided in regulations, for purposes of—

¶(1) section 708 (relating to continuation of partnership),

¶(2) section 743 (relating to optional adjustment to basis of partnership property), and

¶(3) any other provision of this subchapter specified in regulations prescribed by the Secretary,

any distribution of an interest in a partnership (not otherwise treated as an exchange) shall be treated as an exchange.

¶(f) Qualified joint venture

¶(1) In general In the case of a qualified joint venture conducted by a husband and wife who file a joint return for the taxable year, for purposes of this title—

¶(A) such joint venture shall not be treated as a partnership,

¶(B) all items of income, gain, loss, deduction, and credit shall be divided between the spouses in accordance with their respective interests in the venture, and

¶(C) each spouse shall take into account such spouse’s respective share of such items as if they were attributable to a trade or business conducted by such spouse as a sole proprietor.

¶(2) Qualified joint venture For purposes of paragraph (1), the term “qualified joint venture” means any joint venture involving the conduct of a trade or business if—

¶(A) the only members of such joint venture are a husband and wife,

¶(B) both spouses materially participate (within the meaning of section 469(h) without regard to paragraph (5) thereof) in such trade or business, and

¶(C) both spouses elect the application of this subsection.

¶(g) Cross reference

For rules in the case of the sale, exchange, liquidation, or reduction of a partner’s interest, see sections 704(b) and 706(c)(2).

(Aug. 16, 1954, ch. 736, 68A Stat. 252; Pub. L. 94–455, title II, § 213(c)(3)(B), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1548, 1834; Pub. L. 96–222, title I, § 102(a)(2)(C), Apr. 1, 1980, 94 Stat. 208; Pub. L. 98–369, div. A, title I, § 75(b), July 18, 1984, 98 Stat. 594; Pub. L. 99–514, title XVIII, § 1805(c)(2), Oct. 22, 1986, 100 Stat. 2810; Pub. L. 110–28, title VIII, § 8215(a), May 25, 2007, 121 Stat. 193; Pub. L. 114–74, title XI, § 1102(a), Nov. 2, 2015, 129 Stat. 638.)

Terms defined here

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liquidation of a partner’s interest § 761(d)
partner § 761(b)
partnership § 761(a)
qualified joint venture § 761(f)(2)

Regulations under this section

Treasury regulations (26 CFR) issued under § 761

Cross-references

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

This section cites 5 other sections

Cited by 3 Code sections

Cited in 21 regulations not issued under it

Amendment history

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

November 2, 2015Amended by Pub. L. 114–74Parts changed in 2015: (b)
May 25, 2007Amended by Pub. L. 110–28Parts changed in 2007: (f)
October 22, 1986Amended by Pub. L. 99–514Parts changed in 1986: (e)
July 18, 1984Amended by Pub. L. 98–369Parts changed in 1984: (e)
April 1, 1980Amended by Pub. L. 96–222Parts changed in 1980: (a)(3)
October 4, 1976Enacted by Pub. L. 94–455Parts changed in 1976: (a) (e)

Where it sits in the Code

Official notes

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

Editorial Notes

Amendments

2015—Subsec. (b). Pub. L. 114–74 inserted at end “In the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to such interest shall be determined without regard to whether such interest was derived by gift from any other person.”

2007—Subsecs. (f), (g). Pub. L. 110–28 added subsec. (f) and redesignated former subsec. (f) as (g).

1986—Subsec. (e). Pub. L. 99–514 substituted “Distributions of partnership interests” for “Distributions” in heading, substituted “Except as otherwise provided in regulations, for purposes of” for “For purposes of” in introductory provision, and “any distribution of an interest in a partnership” for “any distribution” in closing provisions.

1984—Subsecs. (e), (f). Pub. L. 98–369 added subsec. (e) and redesignated former subsec. (e) as (f).

1980—Subsec. (a)(3). Pub. L. 96–222 added par. (3).

1976—Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

Subsec. (e). Pub. L. 94–455, § 213(c)(3)(B), added subsec. (e).

Effective Date of 2015 Amendment

Amendment by Pub. L. 114–74 applicable to partnership taxable years beginning after Dec. 31, 2015, see section 1102(c) of Pub. L. 114–74, set out as a note under section 704 of this title.

Effective Date of 2007 Amendment

Pub. L. 110–28, title VIII, § 8215(c), May 25, 2007, 121 Stat. 194, provided that: “The amendments made by this section [amending this section, section 1402 of this title, and section 411 of Title 42, The Public Health and Welfare] shall apply to taxable years beginning after December 31, 2006.”

Effective Date of 1986 Amendment

Amendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–369 applicable to distributions, sales, and exchanges made after Mar. 31, 1984, in taxable years ending after such date, see section 75(e) of Pub. L. 98–369, set out as an Effective Date note under section 386 of this title.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96–222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title.

Effective Date of 1976 Amendment

Amendment by section 213(c)(3)(B) of Pub. L. 94–455 applicable in the case of partnership taxable years beginning after Dec. 31, 1975, see section 213(f)(1) of Pub. L. 94–455, set out as a note under section 709 of this title.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.