What are section 704 gains and losses?
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What are section 704 gains and losses?

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Section 704 of the Internal Revenue Code pertains to a partner's distributive share of income, gain, loss, deduction, or credit. It does not specifically define "section 704 gains and losses." However, it does provide rules for how these items are allocated among partners in a partnership.

Under Section 704(b), a partner's distributive share of income, gain, loss, deduction, or credit is determined by the partnership agreement. If the agreement does not provide for the partner's distributive share or if the allocation under the agreement does not have substantial economic effect, then the partner's distributive share is determined in accordance with the partner's interest in the partnership.

Section 704(c) provides rules for contributing property to a partnership. If a partner contributes property to a partnership and the property's fair market value at the time of contribution is different from its tax basis, then income, gain, loss, and deduction with respect to that property must be allocated in a way that takes into account the variation between the basis of the property to the partnership and its fair market value at the time of contribution.

In summary, while Section 704 does not specifically define "section 704 gains and losses," it does provide rules for how a partner's distributive share of income, gain, loss, deduction, or credit is determined.