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the reporting responsibility concerning ■ The name and taxpayer identification ■ The relationship (if any) between the
Sec. 743(b) adjustments onto partner- number of the transferee; transferee and the transferor, and the
ships, as opposed to partners. Prior to ■ The computation of the adjustment; date of the transfer;
these 1999 amendments, notwithstand- and ■ Any liabilities assumed or taken
ing that partnerships were required to ■ The partnership properties to which subject to by the transferee;
make and allocate basis adjustments the adjustment has been allocated. ■ Any money and the FMV of any
under the then-current regulations, There is a special rule regarding other property delivered or to be
transferees were required to report the transfers of interests in oil and gas prop- delivered for the transferred interest
basis adjustments. There was a perceived erties (Regs. Sec. 1.743-1(k)(1)). in the partnership; and
lack of clarity about when (i.e., before or The reporting of a Sec. 743(b) ■ Any other information necessary
after the Schedule K-1, Partner’s Share adjustment by a partnership generally for the partnership to compute the
of Income, Deductions, Credits, etc.) the hinges on the partnership’s receiving transferee’s basis.
effect of the basis adjustment to specific written notice of a sale or exchange In the case of a transfer upon the
partnership items was to be determined or of a transfer upon the death of the death of a partner, the timing of the no-
or who was required to make and report partner. Thus, transferees have a duty to tice is more relaxed: The transferee must
the adjustments to the partnership items. report transfers promptly to their part- notify the partnership, in writing, within
Thus, in the proposed regulations nership. Upon receiving the notice of one year of the partner’s death. Under
that preceded T.D. 8847, the IRS and the transfer, or if any partner who has Regs. Sec. 1.743-1(k)(2)(ii), the written
Treasury explained that the proposed responsibility for federal income tax re- notice to the partnership must be signed
regulations “clarify that partnerships are porting for the partnership has “knowl- under penalties of perjury and must
required to make the basis adjustments” edge” of the transfer, the partnership is include the following:
and that the proposed regulations “place to take action to report the Sec. 743(b) ■ The names and addresses of the
the responsibility for reporting basis ad- adjustment. That is, the knowledge of deceased partner and the transferee;
justments on partnerships” (preamble to such a partner is considered notice for ■ The TINs of the deceased partner
REG-209682-94). The IRS and Trea- this purpose (Regs. Sec. 1.743-1(k) and the transferee;
sury explained further their rationale for (4)). The partnership may rely on the ■ The relationship (if any) between the
the reporting rules they were proposing, written notice unless any partner who transferee and the transferor;
explaining that partnerships, rather than has responsibility for federal income ■ The deceased partner’s date of death;
partners, are better equipped to report tax reporting by the partnership has ■ The date on which the transferee
the Sec. 743(b) adjustment: knowledge of facts indicating that the became the owner of the partnership
statement is clearly erroneous (Regs. interest;
The Service and Treasury believe Sec. 1.743-1(k)(3)). In the absence of ■ The FMV of the partnership interest
that partnerships generally have notice or of the requisite knowledge, on the applicable date of valuation in
better access to the information the partnership is not required to make Sec. 1014; and
necessary to report section 743 basis the adjustments under Sec. 743(b) ■ The manner in which the FMV
adjustments properly. To require the (Regs. Sec. 1.743-1(k)(4)). of the partnership interest was
partners rather than the partnerships Regarding notice by the transferee, determined.
to bear the burden of reporting would in the case of a transfer upon a sale or There are special rules if the trans-
require the partnerships to provide exchange of a partnership interest, the feree is a nominee (Regs. Sec. 1.743-1(k)
the partners with significant amounts transferee must notify the partnership, (2)(iii)).
of information not otherwise in writing, within 30 days of the sale or If a transferee fails to provide the no-
needed by the partners. [preamble, exchange. Under Regs. Sec. 1.743-1(k) tice required, the partnership is to attach
REG-209682-94] (2)(i), the written notice to the partner- a statement to its return in the year that
ship must be signed under penalties of the partnership is otherwise notified of
The reporting rules under the perjury and must include the following: the transfer. The partnership’s statement
Sec. 743(b) regulations ■ The names and addresses of the must set forth the following:
Generally, a partnership that must adjust transferee and (if ascertainable) of the ■ The name and TIN (if ascertainable)
the bases of partnership properties under transferor; of the transferee.
Sec. 743(b) must attach a statement to ■ The taxpayer identification numbers ■ On the front page of the partner-
the partnership return for the year of the (TINs) of the transferee and (if ship’s return and on the first page
transfer setting forth: ascertainable) of the transferor; of any schedule or information

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