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TITLE 26-INTERNAL REVENUE CODE poses of section 162(a) (relating to trade or business expenses). (Aug. 16, 1954, ch. 736, 68A Stat. 243; Oct. 4, 1976, Pub. L. 94-455, title II, § 213(b)(3), title XIX, § 1901(b)(3)(C), 90 Stat. 1547, 1792.) AMENDMENTS 1976--Subsec. (b)(2). Pub. L. 94-455, § 1901(b)(3)(C). substituted "as ordinary income" for "as gain from the sale or exchange of property other than a capital asset". Subsec. (c). Pub. L. 94-455, § 213(b)(3), substituted "and, subject to section 263, for purposes of section 162(a)" for "and section 162(a)". EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (c) by section 213(b)(3) of Pub. L. 94-455 applicable in the case of partnership taxable years beginning after Dec. 31, 1975, see section 213(f)(1) of Pub. L. 94-455, set out as an Effective Date note under section 709 of this title. Amendment of subsec. (b)(2) by section 1901(b)(3)(C) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. CROSS REFERENCES Payments to retiring partner or deceased partner's successor in interest, see section 736 of this title. SECTION RZFEIUiD TO IN OTHER SECTIONS This section is referred to in sections 44, 48, 103, 179, 613A, 631, 706, 736, 1402 of this title, title 42 section 411. § 708. Continuation of partnership (a) General rule For purposes of this subchapter, an existing partnership shall be considered as continuing if it is not terminated. (b) Termination (1) General rule For purposes of subsection (a), a partner- ship shall be considered as terminated only if- (A) no part of any business, financial op- eration, or venture of the partnership con- tinues to be carried on by any of its part- ners in a partnership, or (B) within a 12-month period there is a sale or exchange of 50 percent or more of the total interest in partnership capital and profits. (2) Special rules (A) Merger or consolidation In the case of the merger or consolidation of two or more partnerships, the resulting partnership shall, for purposes of this sec- tion, be considered the continuation of any merging or consolidating partnership whose members own an interest of more than 50 percent in the capital and profits of the re- sulting partnership. (B) Division of a partnership In the case of a division of a partnership into two or more partnerships, the resulting partnerships (other than any resulting part- nership the members of which had an inter- est of 50 percent or less in the capital and profits of the prior partnership) shall, for purposes of this section, be considered a continuation of the prior partnership. (Aug. 16, 1954, ch. 736, 68A Stat. 244.) § 709. Treatment of organization and syndication fees (a) General rule Except as provided in subsection (b), no de- duction shall be allowed under this chapter to the partnership or to any partner for any amounts paid or incurred to organize a partner- ship or to promote the sale of (or to sell) an in- terest in such partnership. (b) Amortization of organization fees (1) Deduction Amounts paid or incurred to organize a partnership may, at the election of the part- nership (made in accordance with regulations prescribed by the Secretary), be treated as de- ferred expenses. Such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the partnership (beginning with the month in which the partnership begins business), or if the partnership is liquidated before the end of such 60-month period, such deferred expenses (to the extent not deducted under this section) may be deducted to the extent provided in section 165. (2) Organizational expenses defined The organizational expenses to which para- graph (1) applies, are expenditures which- (A) are incident to the creation of the partnership; (B) are chargeable to capital account; and (C) are of a character which, if expended incident to the creation of a partnership having an ascertainable life, would be amor- tized over such life. (Added Pub. L. 94-455, title II, § 213(b)(1), Oct. 4, 1976, 90 Stat. 1547.) EFFECTIVE DATE Section 213(f) of Pub. L. 94-455 provided that: "(1) In General.-Except as otherwise provided in this subsection, the amendments made by this section [enacting sections 179(d)(8), 704(f), 709, and 761(e) of this title, and amending sections 704(a), (b), 706(c)(2)(B) and 707(c) of this title] shall apply in the case of partnership taxable years beginning after De- cember 31, 1975. "(2) Subsection (c).-The amendment made by sub- section (c) [to section 704(d) of this title] shall apply to liabilities incurred after December 31, 1976. "(3) Section 709(b) of the Code.-Section 709(b) of the Internal Revenue Code of 1954 (as added by the amendment made by subsection (b)(1) of this section) (subsec. (b) of this section] shall apply in the case of amounts paid or incurred in taxable years beginning after December 31, 1976." PART II-CONTRIBUTIONS, DISTRIBUTIONS AND TRANSFERS Subpart A. Contributions to a partnership. B. Distributions by a partnership. C. Transfers of interests in a partnership. D. Provisions common to other subparts. SUBPART A-CONTRIBUTIONS TO A PARTNERSHIP Sec. 721. Nonrecognition of gain or loss on contribution. 722. Basis of contributing partner's interest. 723. Basis of property contributed to partnership, Page 487 § 709