
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC702]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                 Subchapter K--Partners and Partnerships
 
                 PART I--DETERMINATION OF TAX LIABILITY
 
Sec. 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 there is a deduction under 
    part VIII of subchapter B,
        (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. 736, 68A Stat. 239; Pub. L. 88-272, title II, 
Sec. 201(d)(7), Feb. 26, 1964, 78 Stat. 32; Pub. L. 94-455, title XIV, 
Sec. 1402(b)(1)(L), (2), title XIX, Secs. 1901(b)(1)(I)(i), (ii), 
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1732, 1791, 1834; Pub. L. 96-223, 
title IV, Sec. 404(b)(5), Apr. 2, 1980, 94 Stat. 307; Pub. L. 97-34, 
title III, Sec. 301(b)(5), (6)(C), Aug. 13, 1981, 95 Stat. 270; Pub. L. 
97-248, title IV, Sec. 402(c)(1), Sept. 3, 1982, 96 Stat. 667; Pub. L. 
97-448, title I, Sec. 103(a)(4), Jan. 12, 1983, 96 Stat. 2375; Pub. L. 
98-369, div. A, title X, Sec. 1001(b)(9), (e), July 18, 1984, 98 Stat. 
1011, 1012; Pub. L. 99-514, title VI, Sec. 612(b)(5), Oct. 22, 1986, 100 
Stat. 2250.)


                               Amendments

    1986--Subsec. (a)(5). Pub. L. 99-514 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,''.
    1984--Subsec. (a)(1), (2). Pub. L. 98-369 substituted ``6 months'' 
for ``1 year'', applicable to property acquired after June 22, 1984, and 
before Jan. 1, 1988. See Effective Date of 1984 Amendment note below.
    1983--Subsec. (a)(5). Pub. L. 97-448 substituted ``an exclusion 
under section 116 or 128,'' for ``provided an exclusion under section 
116 or 128''.
    1982--Subsec. (d). Pub. L. 97-248 added subsec. (d).
    1981--Subsec. (a)(5). Pub. L. 97-34, Sec. 301(b)(6)(C), inserted 
reference to ``interest'' in heading and text which continued the 
amendment made by Pub. L. 96-223.
    Pub. L. 97-34, Sec. 301(b)(5), inserted ``or 128'' after ``section 
116''.
    1980--Subsec. (a)(5). Pub. L. 96-223 inserted ``or interest'' after 
``dividends''.
    1976--Subsec. (a)(1), (2). Pub. L. 94-455, Sec. 1402(b)(2), provided 
that ``9 months'' would be changed to ``1 year''.
    Pub. L. 94-455, Sec. 1402(b)(1)(L), provided that ``6 months'' would 
be changed to ``9 months'' for taxable years beginning in 1977.
    Subsec. (a)(7) to (9). Pub. L. 94-455, Secs. 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 partially 
tax-exempt interest on obligations of the United States or its 
instrumentalities, was struck out.
    Subsec. (b). Pub. L. 94-455, Sec. 1901(b)(1)(I)(ii), substituted 
``paragraphs (1) through (7)'' for ``paragraphs (1) through (8)''.
    1964--Subsec. (a)(5). Pub. L. 88-272 struck out ``a credit under 
section 34,'' before ``an exclusion''.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to taxable years beginning 
after Dec. 31, 1986, see section 612(c) of Pub. L. 99-514, set out as a 
note under section 301 of this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable to property acquired after 
June 22, 1984, and before Jan. 1, 1988, see section 1001(e) of Pub. L. 
98-369, set out as a note under section 166 of this title.


                    Effective Date of 1983 Amendment

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


                    Effective Date of 1982 Amendment

    Amendment by Pub. L. 97-248 applicable to partnership taxable years 
beginning after Sept. 3, 1982, with provision for the applicability of 
the amendment to any partnership taxable year ending after Sept. 3, 
1982, 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, see section 407(a)(1), (3) of 
Pub. L. 97-248, set out as an Effective Date note under section 6221 of 
this title.


                    Effective Date of 1981 Amendment

    Amendment by section 301(b)(5) of Pub. L. 97-34 applicable to 
taxable years ending after Sept. 30, 1981, and amendment by section 
301(b)(6)(C) of Pub. L. 97-34 applicable to taxable years beginning 
after Dec. 31, 1981, see section 301(d) of Pub. L. 97-34, set out as a 
note under section 265 of this title.


            Effective and Termination Dates of 1980 Amendment

    Amendment by Pub. L. 96-223 applicable with respect to taxable years 
beginning after Dec. 31, 1980, and before Jan. 1, 1982, see section 
404(c) of Pub. L. 96-223, set out as a note under section 265 of this 
title.


                    Effective Date of 1976 Amendment

    Section 1402(b)(1) of Pub. L. 94-455 provided that the amendment 
made by that section is effective with respect to taxable years 
beginning in 1977.
    Section 1402(b)(2) of Pub. L. 94-455 provided that the amendment 
made by that section is effective with respect to taxable years 
beginning after Dec. 31, 1977.
    Amendment by section 1901(b)(1)(I)(i), (ii) of Pub. L. 94-455 
effective for taxable years beginning after Dec. 31, 1976, see section 
1901(d) of Pub. L. 94-455, set out as a note under section 2 of this 
title.


                    Effective Date of 1964 Amendment

    Amendment by Pub. L. 88-272 applicable with respect to dividends 
received after Dec. 31, 1964, in taxable years ending after such date, 
see section 201(e) of Pub. L. 88-272, set out as a note under section 22 
of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 170, 703, 706, 772, 1366, 
1402, 7519 of this title; title 42 sections 403, 411.
