In final regulations (TD 10048), the IRS and Treasury Department make permanent relief from providing the information required by Part IV of Form 8308 before the due date of the partnership's return. Part IV reports a partner's share of gain or loss in IRC Section 751(a) property (i.e., inventory or unrealized receivables) on the sale or exchange of a partnership interest. The relief, which was first provided in Notice 2024-19, means that partnerships can wait until they file their returns to report this information, when it is more likely to be available.

Partnerships must continue to provide the information required in Parts I, II, and III of Form 8308 by the later of (1) January 31 of the year following the calendar year in which the IRC Section 751(a) exchange occurred or (2) 30 days after the partnership received notice of the exchange.

The final regulations, which are effective for tax years ending on or after May 20, 2026, adopt the proposed regulations from August 2025 with no changes. (See Tax Alert 2025-1733.)

Background

IRC Section 6050K and its regulations require partnerships with IRC Section 751 property to provide information to each transferor and transferee involved in a sale or exchange of an interest in the partnership (IRC Section 751(a) exchange).

Partnerships must report each IRC Section 751(a) exchange on Form 8308, which must be filed as an attachment to Form 1065, U.S. Return of Partnership Income. Under Treas. Reg. Section 1.6050K-1(c)(1), each partnership that files a Form 8308 must furnish it or a statement with the same information by the later of (1) January 31 of the year following the calendar year in which the IRC Section 751(a) exchange occurred or (2) 30 days after the partnership received notice of the exchange under IRC Section 6050K and Treas. Reg Section 1.6050K-1. Partnerships that do not furnish timely, correct payee statements are liable for penalties under IRC Section 6722.

The IRS issued a revised Form 8308 in October 2023 requiring additional information on Part IV with respect to the IRC Section 751 property, including the transferor partner's share of IRC Section 751 gain and loss, collectibles gain under IRC Section 1(h)(5) and unrecaptured IRC Section 1250 gain under IRC Section 1(h)(6).

In Notice 2024-19, the IRS announced that it would not impose penalties under IRC Section 6722 on partnerships that furnish payee statements without Part IV of Form 8308 for certain IRC Section 751(a) exchanges during calendar year 2023 if certain conditions were met. (See Tax Alert 2024-0203.) In Notice 2025-02, the IRS extended that penalty relief to IRC Section 751(a) exchanges that occurred during the 2024 calendar year. (See Tax Alert 2024-2352.)

IRS and Treasury on August 18, 2025, proposed regulations (REG-108822-25) that would make the relief first provided in Notice 2024-19 permanent by removing Treas. Reg. Section 1.6050K-1(c)(2).

The final regulations

The final regulations remove Treas. Reg. Section 1.6050K-1(c)(2), thereby eliminating the requirement that partnerships furnish the information required in Part IV of Form 8308 by January 31 of the year following the calendar year in which an IRC Section 751(a) exchange occurred.

The final regulations also modify Treas. Reg. Section 1.6050K-1(c)(1) to eliminate the reference to a "completed copy of Form 8308" and replace it with a reference to "a copy of Form 8308 filled out in accordance with the instructions to the form." The instructions to Form 8308 were updated by the IRS on November 5, 2025, to provide that only information in Parts I, II and III of the form must be provided by the due dates in IRC Section 6050K.

The removal of Treas. Reg. Section 1.6050K-1(c)(2), in conjunction with the modifications to Treas. Reg. Section 1.6050K-1(c)(1) and the Form 8308 instructions, means a partnership must provide only the information reported on Parts I, II, and III of Form 8308, or a statement that includes the same information, by the later of:

1. January 31 of the year following the calendar year of the exchange
   or
2. 30 days after the partnership receives notice of the exchange as specified by IRC Section 6050K and Treas. Reg. Section 1.6050K-1

Partnerships must continue to file a completed Form 8308, including Part IV, and attach it to their Form 1065, for the partnership's tax year that includes the last day of the calendar year in which the IRC Section 751(a) exchange took place.

Partnerships must also continue to report on the Schedule K-1 (Form 1065) issued to the transferor partner the information that the transferor partner must report under Treas. Reg. Section 1.751-1(a)(3) (including the information required in Part IV of the Form 8308).

Effective date

The removal of Treas. Reg. Section 1.6050K-1(c)(2) is effective on the date the proposed regulations are published as final in the Federal Register (May 20, 2026), and the amendments to Treas. Reg. Section 1.6050K-1(c)(1) are effective for tax years ending on or after May 20, 2026.

Partnerships may, however, rely on the proposed regulations and the changes to the Form 8308 instructions for IRC Section 751(a) exchanges occurring on or after January 1, 2025.

Implications

The final regulations provide welcome relief to taxpayers and tax practitioners by removing the requirement to provide duplicate and accelerated reporting of information already required to be reported on Schedules K-1.