Title 26, Internal Revenue CodeRelease 119-102
§741 Recognition and Character of Gain or Loss on Sale or Exchange
Title 26 › 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 profit or loss on their taxes. That profit or loss is treated like the sale of a capital asset, except for items covered by section 751 (unrealized receivables and inventory items).
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
Aug 21, 2026
Release point: 119-102