SECTION 4. EFFECT OF MONTHLY

CLOSING ELECTION AND CONSENT

If, at the end of any calendar month, an eligible partnership has a Monthly Closing Election in effect and one or more partners of the partnership has a Monthly Closing Consent in effect, then, with respect to each consenting partner, the partnership must close its books as described in § 1.706–1(c)(2) as if the partner had sold its entire interest in the partnership on the last day of that month. The consenting partner must include in its taxable income for that month the partner’s distributive share of items described in § 702(a) earned by the partnership since the last closing of the books with respect to the partner and any guaranteed payments under § 707(c) to the partner that are deductible by the partnership since the last closing of the books with respect to the partner. If the partner is on a 52–53 week taxable year, then the provisions of § 1.441–2T(e) of the temporary Income Tax Regulations apply as if the last day of the month were the last day of the partnership’s taxable year.