The IRS released proposed regulations amending the obligations for information reporting with respect to sales or exchanges of certain partnership interests in owning inventory or unrealized receivables. The proposed regulations impact partnerships.

The proposed regulations would take out §1.6050K-1(c)(2) to remove the requirement that partnerships should furnish the information required in Part IV of Form 8308 by Jan. 31 of the year after the calendar year where the section 751(a) exchange occurred.

The proposed regulations would also modify §1.6050K-1(c)(1) by removing the reference to a “completed copy of Form 8308” to replace it with a reference to “a copy of Form 8308 filled out in accordance with the instructions to the form.”

Additionally, the Treasury Department and the IRS would update the instructions for Form 8308 to provide that only the information in Parts I, II, and III is required by the due dates of section 6050K. As a result of the proposed changes to §1.6050K-1 and the associated modifications in the instructions to Form 8308, a partnership would be required to give the information reported on only Parts I, II, and III of Form 8308, or a statement that includes the same information, to the transferor and transferee in a section 751(a) exchange by the later of (1) Jan. 31 of the year following the calendar year in which  the section 751(a) exchange occurred, or (2) 30 days after the partnership has received notice of the exchange as specified under section 6050K and §1.6050K-1.

Treasury Department and the IRS would make changes to the Instructions for Form 8308 to clarify that a partnership must file a completed Form 8308, including Part IV, as an attachment to its Form 1065.