Title 26 — Internal Revenue CodeRelease 119-73not60
§741 Recognition and Character of Gain or Loss on Sale or Exchange
Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter K— Partners and Partnerships › Part II— CONTRIBUTIONS, DISTRIBUTIONS, AND TRANSFERS › Subpart C— Transfers of Interests in a Partnership › § 741
Summary
When a partner sells or trades their share in a partnership, they must report any gain or loss. That gain or loss is treated as a capital gain or loss unless the special rules about unrealized receivables and inventory items in section 751 apply.
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 5, 2026
Release point: 119-73not60