On November 30, 2020, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) published T.D. 9926, 85 FR 76910, which amended 1.6050K-1(c)(2) to require a partnership to furnish to a transferor partner the information necessary for the transferor to make the transferor partner’s required statement in 1.751-1(a)(3). Among other items, 1.751-1(a)(3) requires a transferor partner in a 751(a) exchange to submit with the transferor partner’s income tax return a statement setting forth the amount of gain or loss attributable to 751 property.  Section 6050K(b) requires that partnerships send the information required, including required by regulation, to the transferor and transferee by January 31 of the year following the year of the transfer.  Section 6722 provides penalties for failure to provide payee statements.  In October 2023, the IRS released a revised version of Form 8308. Consistent with the requirements in 1.6050K-1(c)(2), Part IV of the October 2023 Form 8308 requires a partnership to report, among other items, the partnership’s deemed sale 751 gain or loss, deemed sale 1(h)(5) collectibles gain, and deemed sale 1(h)(6) unrecaptured 1250 gain, as well as the transferor partner’s share of such amounts. This information was also required on the October 2024 version of Form 8308.

Since the issuance of the October 2023 Form 8308, the Treasury Department and the IRS received comments that many partnerships will be unable to furnish the information required in Part IV of the Form 8308 to transferors and transferees by the January 31 due date, because, in many cases, partnerships will not have all of the information required by Part IV of the Form 8308 by January 31 of the year following the calendar year in which the 751(a) exchange occurred. On January 11, 2024, the IRS released Notice 2024-19, which provided relief from penalties under 6722 for partnerships with 751(a) exchanges occurring during calendar year 2023 if partnerships provided Parts I through III of the form to the transferors and transferees by January 31 and completed Part IV to file with the partnerships return by the return deadline. On December 13, 2024, the IRS released Notice 2025-2, which provided the same relief for calendar year 2024.

On February 19, 2025, the President issued Executive Order 14219, Ensuring Lawful Governance and Implementing the President’s Department of Government Efficiency Deregulatory Initiative (Executive Order 14219). Executive Order 14219 directs agencies to initiate a review process for the identification and removal of certain regulations and other guidance that meet any of the factors set forth in Executive Order 14219. Consistent with the review required by Executive Order 14219, the Treasury Department and the IRS have identified  1.6050K-1(c)(2) as creating an undue burden by requiring the information required in Part IV of the Form 8308 be provided to transferors and transferees by January 31.  These proposed regulations withdraw the regulations under  1.6050K-1(c)(2). These regulations affect partnerships and their partners.