§736 — Payments to a retiring partner or a deceased partner’s successor in interest

43 cases·11 followed·7 distinguished·1 questioned·2 criticized·2 overruled·20 cited—26% support

Statute Text — 26 U.S.C. §736

(a)Payments considered as distributive share or guaranteed payment

Payments made in liquidation of the interest of a retiring partner or a deceased partner shall, except as provided in subsection (b), be considered—

(1)

as a distributive share to the recipient of partnership income if the amount thereof is determined with regard to the income of the partnership, or

(2)

as a guaranteed payment described in section 707(c) if the amount thereof is determined without regard to the income of the partnership.

(b)Payments for interest in partnership

(1)General rule

Payments made in liquidation of the interest of a retiring partner or a deceased partner shall, to the extent such payments (other than payments described in paragraph (2)) are determined, under regulations prescribed by the Secretary, to be made in exchange for the interest of such partner in partnership property, be considered as a distribution by the partnership and not as a distributive share or guaranteed payment under subsection (a).

(2)Special rules

For purposes of this subsection, payments in exchange for an interest in partnership property shall not include amounts paid for—

(A)

unrealized receivables of the partnership (as defined in section 751(c)), or

(B)

good will of the partnership, except to the extent that the partnership agreement provides for a payment with respect to good will.

(3)Limitation on application of paragraph (2)

Paragraph (2) shall apply only if—

(A)

capital is not a material income-producing factor for the partnership, and

(B)

the retiring or deceased partner was a general partner in the partnership.

Treasury Regulations

Treas. Reg. §Treas. Reg. §1.736-1 Payments to a retiring partner or a deceased partner's successor in interest
Treas. Reg. §Treas. Reg. §1.736-1(a) Payments considered as distributive share or guaranteed payment.
Treas. Reg. §Treas. Reg. §1.736-1(b) Payments for interest in partnership.
Treas. Reg. §Treas. Reg. §1.736-1(c) Cross reference.
Treas. Reg. §Treas. Reg. §1.736-1(i) §1.736-1(i)

43 Citing Cases

DIST. YA Global Investments, LP, Yorkville Advisors GP, LLC, Tax Matters Partner, Petitioner T.C. Memo. 2024-78 · 2024

The present facts are distinguishable from those of Brennan in that the Foreign SPVs apparently had no interest in YA Global before they 36 [*36] received their participation interests.

DIST. Grecian Magnesite Mining, Industrial & Shipping Co., SA, Petitioner · 2017

(For reasons we discuss below, this conception affects the taxability ofsuch gain.) ¹°The parties agree that section 736(a) does not apply to the disputed gain.

FOLLOWED Donald W. & Kathryn W. Wallis, Petitioner T.C. Memo. 2009-243 · 2009

and (2) the $2,000'-a-month payments were guaranteed payments pursuant to section 736(a)(2) .

Whitman & Ransom; Maged F. Riad, Tax Matters Partner, Petitioners T.C. Memo. 2005-172 · 2005

he interest will not be considered as liquidated until the final distribution has been made. Sec. 1.761-1(d), Income Tax Regs. The severance agreements signed by Parson in 1993 and by Handler in 1994 establish that each had withdrawn as members of 8 Sec. 736 provides in relevant part: SEC. 736. PAYMENTS TO A RETIRING PARTNER OR A DECEASED PARTNER’S SUCCESSOR IN INTEREST. (a) Payments Considered as Distributive Share or Guaranteed Payment.--Payments made in liquidation of the interest of a retiri

Sandra E. Sander, Deceased, Leda Sander, Personal Representative, Petitioner T.C. Memo. 2022-103 · 2022

§ 736.0816(23) (2021) gives her the authority to act for her mother’s estate in this litigation. The provision authorizes a trustee to “[p]rosecute or defend, including appeals, an action, claim, or judicial 8 Middleton raises another issue that would prevent us from appointing Leda an administrator ad litem under Florida Probate Court §733.308. Ev

Markson Bros. v. Commissioner 15 T.C. 839 · 1950

Basalt Rock Co. v. Commissioner 10 T.C. 600 · 1948

Milliken v. Commissioner 72 T.C. 256 · 1979

Coven v. Commissioner 66 T.C. 295 · 1976

Holman v. Commissioner 66 T.C. 809 · 1976

Leo Kahn Furniture Co. v. Commissioner 15 T.C. 918 · 1950

J. L. Goodman Furniture Co. v. Commissioner 11 T.C. 530 · 1948

Cooney v. Commissioner 65 T.C. 101 · 1975

Jackson Investment Co. v. Commissioner 41 T.C. 675 · 1964

Aetna-Standard Engineering Co. v. Commissioner 15 T.C. 284 · 1950

Fuchs v. Commissioner 80 T.C. 506 · 1983

Spector v. Commissioner 71 T.C. 1017 · 1979

Stilwell v. Commissioner 46 T.C. 247 · 1966

Foxman v. Commissioner 41 T.C. 535 · 1964

Berry Trust v. Commissioner 26 T.C. 344 · 1956

Mutual Shoe Co. v. Commissioner 25 T.C. 477 · 1955

Carroll Furniture Co. v. Commissioner 15 T.C. 943 · 1950

Kimbrell's Home Furnishings, Inc. v. Commissioner 7 T.C. 339 · 1946

Hecht Co. v. Commissioner 7 T.C. 643 · 1946

Ware v. Commissioner 92 T.C. 1267 · 1989

Barenholtz v. Commissioner 77 T.C. 85 · 1981

Tatum v. Commissioner 69 T.C. 81 · 1977

Falkoff v. Commissioner 62 T.C. 200 · 1974

Logan v. Commissioner 51 T.C. 482 · 1968

Phillips v. Commissioner 40 T.C. 157 · 1963

Smith v. Commissioner 37 T.C. 1033 · 1962

Myers v. Commissioner 38 T.C. 658 · 1962

Morrisdale Coal Mining Co. v. Commissioner 21 T.C. 393 · 1953

Highland Merchandising Co. v. Commissioner 18 T.C. 737 · 1952

Morrisdale Coal Mining Co. v. Commissioner 19 T.C. 208 · 1952

Seven-Up Co. v. Commissioner 14 T.C. 965 · 1950

Hart Furniture Co. v. Commissioner 12 T.C. 1103 · 1949

Houston Textile Co. v. Commissioner 10 T.C. 735 · 1948

West End Furniture Co. v. Commissioner 6 T.C. 557 · 1946

Mackin Corp. v. Commissioner 7 T.C. 648 · 1946

Pasternack v. Shrader 863 F.3d 162 · Cir.

Donna Browe v. CTC Corp. · Cir.

United States v. Zhen Zhou Wu 711 F.3d 1 · Cir.