Treasury and IRS issued final regulations under section 706 regarding the determination of a partner’s distributive share of partnership items of income, gain, loss, deduction, and credit when a partner’s interest varies during a partnership taxable year.  The final regulations finalize the varying interest rules contained in 2009 proposed regulations, with changes to expand the safe harbor for certain service partnerships.  

Treasury and the IRS also issued proposed regulations today under section 706 on the determination of a partner’s distributive share of some allocable cash basis items and items attributable to an interest in a lower-tier partnership during a partnership tax year in which a partner’s interest changes.