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Title 26, Internal Revenue CodeRelease 119-110

§752 Treatment of Certain Liabilities

Title 26 › Subtitle A — Income Taxes › CHAPTER 1 — NORMAL TAXES AND SURTAXES › Subchapter K — Partners and Partnerships › PART II — CONTRIBUTIONS, DISTRIBUTIONS, AND TRANSFERS › Subpart D — Provisions Common to Other Subparts › § 752

Last updated Sep 22, 2026|Official source

Summary

Treat changes in who owes partnership debts as if money moved between the partner and the partnership. If a partner’s share of partnership debt goes up or a partner takes on partnership debt, it counts as the partner putting money into the partnership. If the partner’s share goes down or the partnership takes on the partner’s personal debt, it counts as the partnership paying money to the partner. Debts tied to property count as the owner’s debt only up to the property’s fair market value. When someone sells a partnership interest, handle the debts the same way you would for a sale of other property.

Full Legal Text

Title 26, §752

Internal Revenue Code, Source: USLM XML via OLRC

(a)Increase in partner’s liabilities
Any increase in a partner’s share of the liabilities of a partnership, or any increase in a partner’s individual liabilities by reason of the assumption by such partner of partnership liabilities, shall be considered as a contribution of money by such partner to the partnership.
(b)Decrease in partner’s liabilities
Any decrease in a partner’s share of the liabilities of a partnership, or any decrease in a partner’s individual liabilities by reason of the assumption by the partnership of such individual liabilities, shall be considered as a distribution of money to the partner by the partnership.
(c)Liability to which property is subject
For purposes of this section, a liability to which property is subject shall, to the extent of the fair market value of such property, be considered as a liability of the owner of the property.
(d)Sale or exchange of an interest
In the case of a sale or exchange of an interest in a partnership, liabilities shall be treated in the same manner as liabilities in connection with the sale or exchange of property not associated with partnerships.

Legislative History

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Overruling of Raphan Case Pub. L. 98–369, div. A, title I, § 79, July 18, 1984, 98 Stat. 597, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(a) General Rule.—section 752 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (and the

Regulations

prescribed thereunder) shall be applied without regard to the result reached in the case of Raphan vs the United States, 3 Cl. Ct. 457 (1983). “(b)

Regulations

.—In amending the

Regulations

prescribed under section 752 of such Code to reflect subsection (a), the Secretary of the Treasury or his delegate shall prescribe

Regulations

relating to liabilities, including the treatment of guarantees, assumptions, indemnity agreements, and similar arrangements.”

Reference

Citations & Metadata

Citation

26 U.S.C. § 752

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110