[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.761-1]

[Page 580-581]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Determination of Tax Liability--Table of Contents
 
Sec. 1.761-1  Terms defined.

    (a) Partnership. The term partnership means a partnership as 
determined under Sec. Sec. 301.7701-1, 301.7701-2, and 301.7701-3 of 
this chapter.
    (b) Partner. The term partner means a member of a partnership.
    (c) Partnership agreement. For the purposes of subchapter K, a 
partnership agreement includes the original agreement and any 
modifications thereof

[[Page 581]]

agreed to by all the partners or adopted in any other manner provided by 
the partnership agreement. Such agreement or modifications can be oral 
or written. A partnership agreement may be modified with respect to a 
particular taxable year subsequent to the close of such taxable year, 
but not later than the date (not including any extension of time) 
prescribed by law for the filing of the partnership return. As to any 
matter on which the partnership agreement, or any modification thereof, 
is silent, the provisions of local law shall be considered to constitute 
a part of the agreement.
    (d) Liquidation of partner's interest. 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. A series of 
distributions will come within the meaning of this term whether they are 
made in one year or in more than one year. Where a partner's interest is 
to be liquidated by a series of distributions, the interest will not be 
considered as liquidated until the final distribution has been made. For 
the basis of property distributed in one liquidating distribution, or in 
a series of distributions in liquidation, see section 732(b). A 
distribution which is not in liquidation of a partner's entire interest, 
as defined in this paragraph, is a current distribution. Current 
distributions, therefore, include distributions in partial liquidation 
of a partner's interest, and distributions of the partner's distributive 
share. See paragraph (a)(1)(ii) of Sec. 1.731-1.
    (e) Distribution of partnership interest. For purposes of section 
708(b)(1)(B) and Sec. 1.708-1(b)(1)(iv), the deemed distribution of an 
interest in a new partnership by a partnership that terminates under 
section 708(b)(1)(B) is not a sale or exchange of an interest in the new 
partnership. However, the deemed distribution of an interest in a new 
partnership by a partnership that terminates under section 708(b)(1)(B) 
is treated as an exchange of the interest in the new partnership for 
purposes of section 743. This paragraph (e) applies to terminations of 
partnerships under section 708(b)(1)(B) occurring on or after May 9, 
1997; however, this paragraph (e) may be applied to terminations 
occurring on or after May 9, 1996, provided that the partnership and its 
partners apply this paragraph (e) to the termination in a consistent 
manner.

[T.D. 6500, 25 FR 11814, Nov. 26, 1960, as amended by T.D. 7208, 37 FR 
20686, Oct. 3, 1972; T.D. 8697, 61 FR 66588, Dec. 18, 1996; T.D. 8717, 
62 FR 25501, May 9, 1997]