240 (b)
INTERNAL REVENUE CODE OF 1954. CHARACTER OF ITEMS CONSTITUTING DISTRIBUTIVE S H A R E, —
The character of any item of income, gain, loss, deduction, or credit included in a partner's distributive share under paragraphs (1) through (8) of subsection (a) shall be determined as if such item were realized directly from the source from which reahzed by the partnership, or incurred in the same manner as incurred by the partnership. (c) GROSS INCOME OF A P A R T N E R. — I n any case where it is necessary to determine the gross income of a partner for purposes of this title, such amount shall include his distributive share of the gross income of the partnership. SEC. 703. PARTNERSHIP COMPUTATIONS.
(a) INCOME AND DEDUCTIONS.—The taxable income of a partnership shall be computed in the same manner as in the case of an individual except that— (1) the items described in section 702(a) shall be separately stated, and (2) the following deductions shall not be allowed to the partnership: (A) the standard deduction provided in section 141, (B) the deductions for personal exemptions provided in section 151, (C) the deduction for taxes provided in section 164(a) with respect to taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States, (D) the deduction for charitable contributions provided in section 170, (E) the net operating loss deduction provided in section 172, and (F) the additional itemized deductions for individuals provided in part VII of subchapter B (sec. 211 and following). (b) ELECTIONS OF THE PARTNERSHIP.—Any election affecting the computation of taxable income derived from a partnership shall be made by the partnership, except that the election under section 901, relating to taxes of foreign countries and possessions of the United States, shall be made by each partner separately. SEC. 704. PARTNER'S DISTRIBUTIVE SHARE.
(a) E F F E C T OF PARTNERSHIP AGREEMENT.^—A partner's distributive share of income, gain, loss, deduction, or credit shall, except as otherwise provided in this section, be determined by the partnership agreement. (b) DISTRIBUTIVE SHARE DETERMINED BY INCOME OR Loss RATIO.—A partner's distributive share of any item of income, gain, loss, deduction, or credit shall be determined in accordance with his distributive share of taxable income or loss of the partnership, as described in section 702(a)(9), for the taxable year, if— (1) the partnership agreement does not provide as to the partner's distributive share of such item, or (2) the principal purpose of any provision in the partnership agreement with respect to the partner's distributive share of such item is the avoidance or evasion of any tax imposed by this subtitle. (c)
CONTRIBUTED PROPERTY. —
§ 702(b)
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