US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 702

Income and credits of partner

(a)

General rule

In determining his income tax, each partner shall take into account separately his distributive share of the partnership’s—
(1)
gains and losses from sales or exchanges of capital assets held for not more than 1 year,
(2)
gains and losses from sales or exchanges of capital assets held for more than 1 year,
(3)
gains and losses from sales or exchanges of property described in section 1231 (relating to certain property used in a trade or business and involuntary conversions),
(4)
charitable contributions (as defined in section 170(c)),
(5)
dividends with respect to which section 1(h)(11) or part VIII of subchapter B applies,
(6)
taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States,
(7)
other items of income, gain, loss, deduction, or credit, to the extent provided by regulations prescribed by the Secretary, and
(8)
taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection.
(b)

Character of items constituting distributive share

The character of any item of income, gain, loss, deduction, or credit included in a partner’s distributive share under paragraphs (1) through (7) of subsection (a) shall be determined as if such item were realized directly from the source from which realized by the partnership, or incurred in the same manner as incurred by the partnership.

(c)

Gross income of a partner

In any case where it is necessary to determine the gross income of a partner for purposes of this title, such amount shall include his distributive share of the gross income of the partnership.

(d)

Cross reference

For rules relating to procedures for determining the tax treatment of partnership items see subchapter C of chapter 63 (section 6221 and following).

Aug. 16, 1954, ch. 73668A Stat. 239Pub. L. 88–272, title II, § 201(d)(7)78 Stat. 32Pub. L. 94–455, title XIV, § 1402(b)(1)(L)90 Stat. 1732Pub. L. 96–223, title IV, § 404(b)(5)94 Stat. 307Pub. L. 97–34, title III, § 301(b)(5)95 Stat. 270Pub. L. 97–248, title IV, § 402(c)(1)96 Stat. 667Pub. L. 97–448, title I, § 103(a)(4)96 Stat. 2375Pub. L. 98–369, div. A, title X, § 1001(b)(9)98 Stat. 1011Pub. L. 99–514, title VI, § 612(b)(5)100 Stat. 2250Pub. L. 108–27, title III, § 302(e)(8)117 Stat. 764(, ; , , ; , (2), title XIX, §§ 1901(b)(1)(I)(i), (ii), 1906(b)(13)(A), , , 1791, 1834; , , ; , (6)(C), , ; , , ; , , ; , (e), , , 1012; , , ; , , .)

Editorial Notes

Amendments

Pub. L. 108–272003—Subsec. (a)(5). amended par. (5) generally. Prior to amendment, par. (5) read as follows: “dividends with respect to which there is a deduction under part VIII of subchapter B,”.

Pub. L. 99–5141986—Subsec. (a)(5). amended par. (5) generally. Prior to amendment, par. (5) read as follows: “dividends or interest with respect to which there is an exclusion under section 116 or 128, or a deduction under part VIII of subchapter B,”.

Pub. L. 98–3691984—Subsec. (a)(1), (2). substituted “6 months” for “1 year”, applicable to property acquired after , and before . See Effective Date of 1984 Amendment note below.

Pub. L. 97–4481983—Subsec. (a)(5). substituted “an exclusion under section 116 or 128,” for “provided an exclusion under section 116 or 128”.

Pub. L. 97–2481982—Subsec. (d). added subsec. (d).

Pub. L. 97–34, § 301(b)(6)(C)Pub. L. 96–2231981—Subsec. (a)(5). , inserted reference to “interest” in heading and text which continued the amendment made by .

Pub. L. 97–34, § 301(b)(5), inserted “or 128” after “section 116”.

Pub. L. 96–2231980—Subsec. (a)(5). inserted “or interest” after “dividends”.

Pub. L. 94–455, § 1402(b)(2)1976—Subsec. (a)(1), (2). , provided that “9 months” would be changed to “1 year”.

Pub. L. 94–455, § 1402(b)(1)(L), provided that “6 months” would be changed to “9 months” for taxable years beginning in 1977.

Pub. L. 94–455Subsec. (a)(7) to (9). , §§ 1901(b)(1)(I)(i), 1906(b)(13)(A), redesignated pars. (8) and (9) as (7) and (8), respectively, and in par. (7), as so redesignated, struck out “or his delegate” after “Secretary”. Former par. (7), which related to partially tax-exempt interest on obligations of the United States or its instrumentalities, was struck out.

Pub. L. 94–455, § 1901(b)(1)(I)(ii)Subsec. (b). , substituted “paragraphs (1) through (7)” for “paragraphs (1) through (8)”.

Pub. L. 88–2721964—Subsec. (a)(5). struck out “a credit under section 34,” before “an exclusion”.

Statutory Notes and Related Subsidiaries

Effective Date of 2003 Amendment

Pub. L. 108–27section 302(f) of Pub. L. 108–27section 1 of this titleAmendment by applicable, except as otherwise provided, to taxable years beginning after , see , set out as an Effective and Termination Dates of 2003 Amendment note under .

Effective Date of 1986 Amendment

Pub. L. 99–514section 612(c) of Pub. L. 99–514section 301 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 1984 Amendment

Pub. L. 98–369section 1001(e) of Pub. L. 98–369section 166 of this titleAmendment by applicable to property acquired after , and before , see , set out as a note under .

Effective Date of 1983 Amendment

Pub. L. 97–448Pub. L. 97–34section 109 of Pub. L. 97–448section 1 of this titleAmendment by effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, , to which such amendment relates, see , set out as a note under .

Effective Date of 1982 Amendment

Pub. L. 97–248, title IV, § 407(a)96 Stat. 670Pub. L. 99–514, § 2100 Stat. 2095

“(1)
section 1508 of Title 28section 1346 of Title 28section 6031 of this title Except as provided in paragraph (2), the amendments made by sections 402, 403, and 404 [enacting sections 6221 to 6234 of this title and , Judiciary and Judicial Procedure, amending this section and sections 6031, 6213, 6216, 6422, 6501, 6504, 6511, 6512, 6515, 7422, 7451, 7456, 7459, 7482, and 7485 of this title and , and enacting provisions set out as a note under ] shall apply to partnership taxable years beginning after the date of the enactment of this Act [].
“(2)
[Former] Section 6232 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall apply to periods after .
“(3)
The amendments made by sections 402, 403, and 404 shall apply to any partnership taxable year (or in the case of [former] section 6232 of such Code, to any period) ending after the date of the enactment of this Act [] if the partnership, each partner, and each indirect partner requests such application and the Secretary of the Treasury or his delegate consents to such application.”
, , , as amended by , , , provided that:

Effective Date of 1981 Amendment

section 301(b)(5) of Pub. L. 97–34section 301(b)(6)(C) of Pub. L. 97–34section 301(d) of Pub. L. 97–34section 265 of this titleAmendment by applicable to taxable years ending after , and amendment by applicable to taxable years beginning after , see , set out as a note under .

Effective and Termination Dates of 1980 Amendment

Pub. L. 96–223section 404(c) of Pub. L. 96–223section 265 of this titleAmendment by applicable with respect to taxable years beginning after , and before , see , set out as a note under .

Effective Date of 1976 Amendment

Pub. L. 94–455, title XIV, § 1402(b)(1)90 Stat. 1731, , , provided that the amendment made by that section is effective with respect to taxable years beginning in 1977.

Pub. L. 94–455, title XIV, § 1402(b)(2)90 Stat. 1732, , , provided that the amendment made by that section is effective with respect to taxable years beginning after .

Pub. L. 94–455section 1901(d) of Pub. L. 94–455section 2 of this titleAmendment by section 1901(b)(1)(I)(i), (ii) of effective for taxable years beginning after , see , set out as a note under .

Effective Date of 1964 Amendment

Pub. L. 88–272section 201(e) of Pub. L. 88–272section 22 of this titleAmendment by applicable with respect to dividends received after , in taxable years ending after such date, see , set out as a note under .