---
kind: "section"
citation: "26 U.S.C. § 741"
title: "26"
title_heading: "Internal Revenue Code"
number: "741"
heading: "Recognition and character of gain or loss on sale or exchange"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/741"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter K — Partners and Partnerships"
  - "Part II — Contributions, Distributions, and Transfers"
  - "Subpart C — Transfers of Interests in a Partnership"
---

# §741. Recognition and character of gain or loss on sale or exchange


In the case of a [sale or exchange](/usc/26/864.md?p=c-8-D) of an [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a), gain or loss shall be recognized to the transferor [partner](/usc/26/761.md?p=b). Such gain or loss shall be considered as gain or loss from the [sale or exchange](/usc/26/864.md?p=c-8-D) of a [capital asset](/usc/26/1221.md?p=a), except as otherwise provided in [section 751](/usc/26/751.md) (relating to unrealized receivables and inventory items).


## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 248; Pub. L. 107–147, title IV, § 417(12), Mar. 9, 2002, 116 Stat. 56.)

## Notes

### Editorial Notes

### Amendments

2002—Pub. L. 107–147 struck out “which have appreciated substantially in value” after “inventory items”.