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An exception to this rule is made for sales or exchanges of publicly traded partnership interests for which a broker is required to file Form 1099-B, Proceeds From Broker and Barter Exchange Transactions.

If a partner is required to notify the partnership of a section 751(a) exchange but fails to do so, the partner will be subject to a penalty for each such failure.

A "section 751(a) exchange" is any sale or exchange of a partnership interest in which any money or other property received by the partner in exchange for that partner's interest is attributable to unrealized receivables (as defined in section 751(c)) or inventory items (as defined in section 751(d)).

The amount of loss and deduction that you can claim on your tax return may be less than the amount reported on Schedule K-1.

Any deficiency that results from making the amounts consistent may be assessed immediately.

Generally, a partner who sells or exchanges a partnership interest in a section 751(a) exchange must notify the partnership, in writing, within 30 days of the exchange (or, if earlier, by January 15 of the calendar year following the calendar year in which the exchange occurred).

If you believe the partnership has made an error on your Schedule K-1, notify the partnership.

Don’t change any items on your copy of Schedule K-1.


  1. Partner's Share of Income Loss From an Electing Large Partnership For Partner's Use Only

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