Rule2026-10116
Returns Relating to Sales or Exchanges of Certain Partnership Interests
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 20, 2026
Effective
May 20, 2026
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document contains final regulations modifying information reporting obligations with respect to sales or exchanges of certain interests in partnerships owning inventory or unrealized receivables.
Full Text
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<title>Federal Register, Volume 91 Issue 97 (Wednesday, May 20, 2026)</title>
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[Federal Register Volume 91, Number 97 (Wednesday, May 20, 2026)]
[Rules and Regulations]
[Pages 29362-29365]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10116]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 10048]
RIN 1545-BR54
Returns Relating to Sales or Exchanges of Certain Partnership
Interests
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
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[[Page 29363]]
SUMMARY: This document contains final regulations modifying information
reporting obligations with respect to sales or exchanges of certain
interests in partnerships owning inventory or unrealized receivables.
DATES:
Effective date: These regulations are effective on May 20, 2026.
Applicability date: For dates of applicability, see Sec. 1.6050K-
1(h).
FOR FURTHER INFORMATION CONTACT: Benjamin Weaver, (202) 317-6850 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Authority
This document contains final regulations amending the Income Tax
Regulations (26 CFR part 1) under section 6050K of the Internal Revenue
Code (Code) by removing Sec. 1.6050K-1(c)(2).
Section 6050K(a) provides that, except as provided in regulations
prescribed by the Secretary of the Treasury or the Secretary's delegate
(Secretary), a partnership is required to file a return if there is an
exchange described in section 751(a) of the Code of any interest in the
partnership during any calendar year. Section 6050K(a) also contains
express delegations of authority for the Secretary to promulgate
regulations prescribing the information required to be disclosed on
such partnership returns, the manner in which such returns are made,
and the due date of such returns.
Section 6031(a) of the Code provides an express grant of authority
for the Secretary to prescribe in forms or regulations partnership
reporting information required ``for the purpose of carrying out the
provisions of subtitle A.''
Section 7805(a) of the Code authorizes the Secretary to ``prescribe
all needful rules and regulations for the enforcement of [the Code],
including all rules and regulations as may be necessary by reason of
any alteration of law in relation to internal revenue.''
Background
I. Statutory and Regulatory Background
Section 741 of the Code provides that gain or loss recognized by a
transferor partner upon sale or exchange of a partnership interest is
considered as gain or loss from the sale or exchange of a capital
asset, except as provided in section 751. Section 751(a) provides that
the amount of any money, or the fair market value of any property,
received by a transferor partner in exchange for all or a part of the
transferor partner's interest in the partnership attributable to (1)
unrealized receivables of the partnership, or (2) inventory items of
the partnership, will be considered as an amount realized from the sale
or exchange of property other than a capital asset. Section 1.6050K-
1(a)(4)(i) refers to a sale or exchange to which section 751(a) applies
as a ``section 751(a) exchange.''
Section 6050K(a) requires a partnership to file a return if there
is a section 751(a) exchange of any interest in the partnership during
any calendar year. Section 6050K(a) further provides that the return
must state the name and address of the transferee and transferor in the
section 751(a) exchange and such other information as the Secretary may
by regulations prescribe.
Section 1.6050K-1(a)(1) generally requires a partnership to make a
separate return using Form 8308, Report of a Sale or Exchange of
Certain Partnership Interests, with respect to each section 751(a)
exchange. Section 1.6050K-1(b) requires the Form 8308 to include the
following information: (1) the names, addresses, and taxpayer
identification numbers of the transferee and transferor in the exchange
and of the partnership filing the return; (2) the date of the exchange;
and (3) such other information as may be required by Form 8308 or its
instructions. Section 1.6050K-1(f)(1) requires a partnership to file
Form 8308 as an attachment to its Form 1065, U.S. Return of Partnership
Income, for the partnership's taxable year that includes the last day
of the calendar year in which the section 751(a) exchange took place.
Section 6050K(b) requires a partnership to provide certain
information to transferors and transferees that are parties to a
section 751(a) exchange on or before January 31 of the year following
the calendar year of the section 751(a) exchange. Among other things,
the information provided to each transferor and transferee must include
the information required to be shown on the partnership's return under
section 6050K(a) with respect to such person.
Section 6050K(c)(1) provides that the transferor of the partnership
interest must notify the partnership of any exchange described in
section 6050K(a). Under section 6050K(c)(2), a partnership is not
required to make a return under section 6050K with respect to any
exchange until the partnership is notified of such exchange.
Section 1.6050K-1(c)(1) clarifies that each partnership that is
required to file a Form 8308 must furnish a statement to the transferor
and transferee by the later of (1) January 31 of the year following the
calendar year in which the section 751(a) exchange occurs, or (2) 30
days after the partnership receives notice of the exchange as specified
under section 6050K(c) and Sec. 1.6050K-1(e). Prior to its
modification by these final regulations, Sec. 1.6050K-1(c)(1)
generally required a partnership to use a copy of the completed Form
8308 as the required statement.
In addition, prior to its removal by these final regulations, Sec.
1.6050K-1(c)(2) required a partnership to furnish to a transferor
partner the information necessary for the transferor to make the
transferor partner's required statement in Sec. 1.751-1(a)(3). Section
1.751-1(a)(3) requires a transferor partner in a section 751(a)
exchange to submit with the transferor partner's income tax return for
the taxable year in which the sale or exchange occurs a statement
separately stating the date of the sale or exchange, the amount of any
gain or loss attributable to section 751 property, and the amount of
any gain or loss attributable to capital gain or loss on the sale of
the partnership interest. Consistent with Sec. 1.6050K-1(c)(2), Part
IV of Form 8308 requires a partnership to report, among other items,
the partnership's gain or loss from a deemed sale under section 751 and
the transferor partner's share of such amount.
The Department of the Treasury (Treasury Department) and the IRS
received comments from stakeholders that many partnerships are unable
to furnish the information required in Part IV of the Form 8308 to
transferors and transferees by the January 31 due date prescribed by
Sec. 1.6050K-1(c)(1) because, in many cases, partnerships do not have
all the information required by Part IV of the Form 8308 by January 31
of the year following the calendar year in which the section 751(a)
exchange occurred.
II. Proposed Regulations
In response to those comments, on August 19, 2025, the Treasury
Department and the IRS published a notice of proposed rulemaking (REG-
108822-25) in the Federal Register (90 FR 40269) to propose the removal
of Sec. 1.6050K-1(c)(2) (proposed regulations). The proposed
regulations also proposed to modify Sec. 1.6050K-1(c)(1) by removing
the reference to a ``completed copy of Form 8308'' and replacing it
with a reference to ``a copy of Form 8308 filled out in accordance with
the instructions to the form.'' In addition, the preamble to the
proposed regulations explained that the Treasury Department and the IRS
would update the instructions for Form 8308 to provide that only the
information in
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Parts I, II, and III is required by the due dates of section 6050K. The
instructions to Form 8308 were updated on November 5, 2025.
As a result of the proposed changes to Sec. 1.6050K-1 and the
associated changes in the instructions to Form 8308, a partnership
would be required to furnish the information reported on only Parts I,
II, and III of Form 8308, or a statement that includes the same
information, to the transferor and transferee in a section 751(a)
exchange by the later of (1) January 31 of the year following the
calendar year in which the section 751(a) exchange occurred, or (2) 30
days after the partnership has received notice of the exchange as
specified under section 6050K and Sec. 1.6050K-1.
Further, the preamble to the proposed regulations explained that
the Treasury Department and the IRS would update the Instructions for
Form 8308 to make clear that a partnership must file a completed Form
8308, including Part IV, as an attachment to its Form 1065. The update
to the Form 8308 instructions reflects this. Accordingly, and pursuant
to Sec. 1.6031(a)-1(a)(2), which provides that a partnership return
must contain the information required by the prescribed form and the
accompanying instructions, a partnership would be required to file the
completed Form 8308, including Part IV, as an attachment to its Form
1065, for the taxable year of the partnership that includes the last
day of the calendar year in which the section 751(a) exchange took
place. Thus, the requirement that a partnership file a completed Form
8308, including Part IV, as an attachment to its Form 1065 would remain
unchanged by the proposed regulations.
The preamble to the proposed regulations further explained that,
pursuant to Sec. 1.6031(b)-1T(a)(3), the partnership will also
continue to be required to report the information required of the
transferor in Sec. 1.751-1(a)(3) to the transferor (including the
information required in Part IV of the Form 8308), in the Schedule K-1
(Form 1065), Partner's Share of Income, Deductions, Credits, etc.,
issued to the transferor partner as provided by the Form and
Instructions to the Schedule K-1 (Form 1065).
Finally, the proposed regulations would modify Sec. 1.6050K-
1(c)(1)(i) to clarify that the partnership will be providing to the IRS
the information included on a substitute statement furnished in lieu of
a Form 8308 under Sec. 1.6050K-1(c)(1).
The preamble to the proposed regulations stated that Sec. 1.6050K-
1(c)(2) was proposed to be removed on the date the regulations are
published as final regulations in the Federal Register. The amendment
to Sec. 1.6050K-1(c)(1)(i) was proposed to apply to returns filed for
taxable years ending on or after the date the regulations are published
as final regulations in the Federal Register. The preamble to the
proposed regulations stated that a partnership may rely on the proposed
regulations, and the description of the anticipated changes to the
instructions to Form 8308 contained in the preamble to the proposed
regulations, with respect to section 751(a) exchanges occurring on or
after January 1, 2025, and before the date the regulations are
published as final regulations in the Federal Register.
Summary of Comments and Explanation of Revisions
The Treasury Department and IRS did not receive any comments
pertaining to the proposed regulations, and no public hearing was
requested or held. Accordingly, these final regulations adopt the
proposed regulations without change.
Special Analyses
I. Regulatory Planning and Review
These final regulations are not subject to review under section
6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement
(July 4, 2025) between the Treasury Department and the Office of
Management and Budget (OMB) regarding review of tax regulations.
Therefore, a regulatory impact assessment is not required.
The Executive Order 14192 designation for this rule is expected to
be deregulatory.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) generally
requires that a Federal agency obtain the approval of the OMB before
collecting information from the public, whether such collection of
information is mandatory, voluntary, or required to obtain or retain a
benefit. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid control number. These final
regulations do not impose a new collection of information or modify an
existing collection of information.
III. Regulatory Flexibility Act
It is hereby certified that the final regulations will not have a
significant economic impact on a substantial number of small entities
pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6). These
final regulations affect partnerships for which there is a section
751(a) exchange (as defined in Sec. 1.6050K-1(a)(4)(i)). These final
regulations will likely affect a substantial number of small entities
organized as partnerships for Federal tax purposes, but the impact of
the final regulations is limited because the final regulations delay
the date by which partnerships must provide transferors of interests in
the partnership the information necessary for the transferor to make
the transferor's required statement under Sec. 1.751-1(a)(3). This
delay benefits the partnerships by providing additional time to furnish
the information but will not have a significant economic impact.
Accordingly, a regulatory flexibility analysis under the Regulatory
Flexibility Act is not required.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandate Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
State, local, or Tribal government, in the aggregate, or by the private
sector, of $100 million (updated annually for inflation). These final
regulations do not include any Federal mandate that may result in
expenditures by State, local, or Tribal governments or by the private
sector in excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on State and local
governments, and is not required by statute, or preempts State law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive order. These final regulations do not have
federalism implications and do not impose substantial, direct
compliance costs on State and local governments or preempt State law
within the meaning of the Executive order.
VI. Small Business Administration
Pursuant to section 7805(f) of the Code, the proposed rule
preceding these final regulations was submitted to the Chief Counsel
for Advocacy of the Small Business Administration for comment on its
impact on small business. No comments were received from the Chief
Counsel for Advocacy of the Small Business Administration.
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VII. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
Drafting Information
The principal author of these final regulations is the Office of
Associate Chief Counsel (Passthroughs, Trusts, and Estates). However,
other personnel from the Treasury Department and the IRS participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Amendments to the Regulations
Accordingly, the Treasury Department and IRS amend 26 CFR part 1 as
follows:
PART 1--INCOME TAXES
0
Paragraph 1.The authority citation for part 1 continues to read in part
as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
0
Par. 2. Section 1.6050K-1 is amended by:
0
1. Adding a heading for paragraph (c);
0
2. Revising the paragraph heading and introductory text of paragraph
(c)(1);
0
3. Revising paragraph (c)(1)(i);
0
4. Removing paragraph (c)(2) and redesignating paragraph (c)(3) as new
paragraph (c)(2); and
0
5. Revising paragraph (h).
The addition and revisions read as follows:
Sec. 1.6050K-1 Returns relating to sales or exchanges of certain
partnership interests.
* * * * *
(c) Statement to be furnished to transferor and transferee--(1) In
general. Every partnership required to file a return under paragraph
(a) of this section must furnish to each person whose name is required
to be set forth in such return a written statement on or before January
31 of the calendar year following the calendar year in which the
section 751(a) exchange occurred to which the return under paragraph
(a) of this section relates (or, if later, 30 days after the
partnership is notified of the exchange as defined in paragraph (e) of
this section). The partnership must use a copy of the Form 8308, filled
out in accordance with the instructions accompanying the form, as a
statement unless the Form 8308 contains information with respect to
more than one section 751(a) exchange (see paragraph (a)(3) of this
section). If the partnership does not use a copy of Form 8308 as a
statement, the statement shall include the information required to be
shown on Form 8308 with respect to the section 751(a) exchange to which
the person to whom the statement is furnished is a party. In addition,
it shall state that--
(i) The information shown on the statement will be supplied to the
Internal Revenue Service,
* * * * *
(h) Applicability date. Paragraphs (c)(1) introductory text and
(c)(1)(i) of this section apply to returns filed for taxable years
ending on or after May 20, 2026. Paragraph (c)(2) of this section
applies to returns filed on or after November 30, 2020. Paragraph
(d)(3) of this section applies to transfers that occur on or after
November 30, 2020.
Frank J. Bisignano,
Chief Executive Officer.
Approved: April 29, 2026.
Kenneth J. Kies,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2026-10116 Filed 5-19-26; 8:45 am]
BILLING CODE 4830-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.