65 STAT.]
PUBLIC LAW 183—OCT. 20, 1951
511
SEC. 340. FAMILY PARTNERSHIPS. (a) DEFINITION OF PARTNER.—Section 3797(a)(2) is hereby I§*^^:cf^53797(a) amended by adding at the end thereof the following: "A person shall (2). be recognized as a partner for income tax purposes if he owns a capital interest in a partnership in which capital is a material income-producing factor, whether or not such interest was derived by purchase or gift from any other person." (b)
ALLOCATION
OF PARTNERSHIP
INCXDME.—Supplement
F
of
chapter 1 is hereby amended by adding at the end thereof the following ^ u^*s.^c. § isi§ new section: i90"SEC. 191. FAMILY PARTNERSHIPS. " I n the case of any partnership interest created by gift, the distributive share of the donee under the partnership agreement shall be includible in his gross income, except to the extent that such share is determined without allowance of reasonable compensation for services rendered to the partnership by the donor, and except to the extent that the portion of such share attributable to donated capital is proportionately greater than the share of the donor attributable to the donor's capital. The distributive share of a partner in the earnings of the partnership shall not be diminished because of absence due to military service. For the purpose of this section, an interest purchased by one member of a family from another shall be considered to be created by gift from the seller, and the fair market value of the purchased interest shall be considered to be donated capital. The 'family' of any individual shall include only his spouse, ancestors, and lineal descendants, and any trust for the primary benefit of such persons." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable with respect to taxable years beginning after December 31, 1950. The determination as to whether a person shall be recognized as a partner for income tax purposes for any taxable year beginning before January 1, 1951, shall be made as if this section had not been enacted and without inferences drawn from the fact that this section is not expressly made applicable with respect to taxable years beginning before January 1, 1951. I n applying this subsection where the taxable year of any family partner is different from the taxable year of the partnership— (1) if a taxable year of the partnership beginning in 1950 ends within or with, as to all of the family partners, taxable years which begin in 1951, then the amendments made by this section shall be applicable with respect to all distributive shares of income derived by the family partners from such taxable year of the partnership beginning in 1950, and (2) if a taxable year of the partnership ending in 1951 ends within or with a taxable year of any family partner which began in 1950, then the amendments made by this section shall not be applicable with respect to any of the distributive shares of income derived by the family partners from such taxable year of the partnership. SEC. 341. WAR LOSSES. (a) TAX U P O N W A R Loss RECOVERY.—Section 127(c) (relating to recoveries included in gross income) is hereby amended to read as follows: "(c)
RECOVERIES.— "(1) GENERAL RULE.—Upon the recovery in the taxable year
of any money or property in respect of property considered under subsection (a) as destroyed or seized in any prior taxable year, 76100 O - 52 (PT. I) - 35
^fj^^aff
2 6 U.S.C. § 127(c),
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