Form 8308 (Rev. 9-2018)
Page 2
Note: The transferor of the interest is
required to notify the partnership of the
exchange of the partnership interest
unless, under section 6045, Form 1099-B
is required to be filed.
Form 8308 must generally be prepared
prior to the time it must be attached to the
partnership return and sent to the IRS. This
will allow the timely furnishing of Forms
8308 to the transferor and transferee.
Instructions to Transferors
This form alerts transferors that they are
required to treat a portion of the gain
realized from a section 751(a) exchange as
ordinary income. For more details, see
Pub. 541.
Separate statement required by
transferor. The transferor is required by
Regulations section 1.751-1(a)(3) to attach
a statement to the transferor’s income tax
return for the tax year of the sale or
exchange with the following information.
1. The date of the sale or exchange.
2. The amount of any gain or loss
attributable to the section 751 property.
3. The amount of any gain or loss
attributable to capital gain or loss on the
sale of the partnership interest.
Instructions to Partnerships
Section 751(a) exchange. A section 751(a)
exchange occurs when money or any
property is exchanged for all or part of a
partnership interest that is attributable to
unrealized receivables or inventory items.
Generally, any sale or exchange of a
partnership interest (or any portion) at a
time when the partnership has any
unrealized receivables or inventory items is
a section 751(a) exchange.
Unrealized receivables. Unrealized
receivables, to the extent not previously
includible in income under the
partnership’s accounting method, are any
rights to payment for:
1. Goods delivered or to be delivered, to
the extent that the payment would be
treated as received for property other than
a capital asset; and
2. Services rendered or to be rendered.
Unrealized receivables also include the
amount of gain that would be ordinary
income if any of the following types of
partnership property were sold on the date
of the section 751(a) exchange.
• Mining property (section 617(f)(2)).
• Stock in an interest charge domestic
international sales corporation (section
992(a)).
• Farm recapture property or farm land
(section 1252(a)).
• Franchises, trademarks, or trade names
(section 1253(a)).
• Oil, gas, or geothermal property (section
1254).
• Stock of a controlled foreign corporation
(section 1248).
• Section 1245 property.
• Section 1245 recovery property.
• Section 1250 property.
• Market discount bonds (section 1278).
• Short-term governmental obligations
(section 1283).
• Other short-term obligations (section
1283(c)).
Inventory items. Inventory items are not
just stock in trade of the partnership. They
also include the following.
• Any properties that would be included in
inventory if on hand at the end of the tax
year or that are held primarily for sale to
customers in the normal course of
business.
• Any asset that is not a capital asset or is
not treated as a capital asset.
• Any other property held by the
partnership that would be considered
inventory if held by the transferor partner.
• Any trade receivables of accrual method
partnerships.
Tiered partnerships. In determining
whether partnership property is an
unrealized receivable or an inventory item,
the partnership is treated as owning its
proportionate share of the property of any
other partnership in which it is a partner.
See section 751(f).
Penalty for late filing of correct Form
8308. A penalty may be imposed for failing
to file each Form 8308 when due, including
extensions. The penalty may also be
imposed for failing to include all required
information on Form 8308 or for furnishing
incorrect information. The penalty is based
on when the partnership files a correct
Form 8308.
The penalty will not apply to any failure
that the partnership can show was due to
reasonable cause and not willful neglect.
For more details, see sections 6721 and
6724.
Penalty for failure to furnish correct
Forms 8308 to transferor and
transferee. A penalty may be imposed for
each failure to furnish when due a copy of
Form 8308 to either party to the exchange.
The penalty may also be imposed for each
failure to give the transferor or transferee all
required information on each Form 8308 or
for furnishing incorrect information. If the
partnership intentionally disregards the
requirement to report correct information,
each penalty is increased. The penalty will
not apply to any failure that the
partnership can show was due to
reasonable cause and not willful neglect.
See sections 6722 and 6724 for more
details.
Partnership address. Include the suite,
room, or other unit number after the street
address. If the Post Office does not deliver
mail to the street address and the
partnership has a P.O. box, show the box
number instead.
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right
amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated burden for
business taxpayers filing this form is
approved under OMB control number
1545-0123 and is included in the estimates
shown in the instructions for their business
income tax return.
If you have suggestions for making these
forms simpler, we would be happy to hear
from you. You can send us comments from
www.irs.gov/FormComments. You can
write to the Internal Revenue Service, Tax
Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Do not send Form 8308 to this address.
Instead, see When to file on page 1.
