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e-CFR data is current as of February 24, 2021


26 CFR--PART 1.704

View Printed Federal Register page 85 FR 72033 in PDF format.

Amendment(s) published November 12, 2020, in 85 FR 72033

Effective Dates: Jan. 11, 2021

Par. 3. Section 1.704-1 is amended by:

1. In paragraph (b)(1)(ii)(b)(1), revising the fourth sentence and adding a new fifth sentence.

2. Revising paragraph (b)(4)(viii)(d)(1).

The revisions and addition read as follows:

§1.704-1   Partner's distributive share.

*   *   *   *   *

(b) *  *  *

(1) *  *  *

(ii) *  *  *

(b) *  *  *

(1) *  *  * Except as provided in the next sentence, the provisions of paragraphs (b)(4)(viii)(a)(1), (b)(4)(viii)(c)(1), (b)(4)(viii)(c)(2)(ii) and (iii), (b)(4)(viii)(c)(3) and (4), and (b)(4)(viii)(d)(1) (as in effect on July 24, 2019) and in paragraphs (b)(6)(i), (ii), and (iii) of this section (Examples 1, 2, and 3) apply for partnership taxable years that both begin on or after January 1, 2016, and end after February 4, 2016. For partnership taxable years beginning after December 31, 2019, paragraph (b)(4)(viii)(d)(1) of this section applies. *  *  *

*   *   *   *   *

(4) *  *  *

(viii) *  *  *

(d) *  *  * (1) In general. CFTEs are allocated and apportioned to CFTE categories in accordance with §1.861-20 by treating each CFTE category as a statutory grouping (with no residual grouping). See paragraphs (b)(6)(ii) and (iii) of this section (Examples 2 and 3), which illustrate the application of this paragraph (b)(4)(viii)(d)(1) in the case of serial disregarded payments subject to withholding tax. In addition, if as described in §1.861-20(e), foreign law does not provide for the direct allocation or apportionment of expenses, losses or other deductions allowed under foreign law to a CFTE category of income, then such expenses, losses or other deductions must be allocated and apportioned to gross income as determined under foreign law in a manner that is consistent with the allocation and apportionment of such items for purposes of determining the net income in the CFTE categories for Federal income tax purposes pursuant to paragraph (b)(4)(viii)(c)(3) of this section.

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