Title 26 — Internal Revenue CodeRelease 119-73
§741 Recognition and character of gain or loss on sale or exchange
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter K— - Partners and Partnerships › Part PART II— - CONTRIBUTIONS, DISTRIBUTIONS, AND TRANSFERS › Subpart Subpart C— - Transfers of Interests in a Partnership › § 741
Summary
When a partner sells or trades their share in a partnership, the partner must report any gain or loss. That gain or loss is treated like the result of selling a capital asset, unless section 751 (about unrealized receivables and inventory items) says something different.
Full Legal Text
Title 26, §741
Internal Revenue Code — Source: USLM XML via OLRC
In the case of a sale or exchange of an interest in a partnership, gain or loss shall be recognized to the transferor partner. Such gain or loss shall be considered as gain or loss from the sale or exchange of a capital asset, except as otherwise provided in section 751 (relating to unrealized receivables and inventory items).
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2002—Pub. L. 107–147 struck out “which have appreciated substantially in value” after “inventory items”.
Reference
Citations & Metadata
Citation
26 U.S.C. § 741
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73