INCOME TAX

Rev. Rul. 2003–73, page 44. Deductions of section 277 membership organizations. This ruling illustrates the operation of section 277. Membership organizations subject to section 277 can take allowable deductions attributable to providing goods and services to members only to the extent of member income in computing the organizationÊs taxable income. Excess deductions are not deductible against nonmember income but are allowable as deductions against member income in succeeding years. Other allowable deductions are fully deductible, including deductible against member income, in computing taxable income.

T.D. 9062, page 46. REG–106736–00, page 60. Temporary and proposed regulations under section 752 of the Code concern the assumption of a partnerÊs liability, by a partnership, that is not taken into account under section 752(a) and (b) (section 1.752–7 liability). The proposed regulations contained in section 1.752–7 require a partner who has a section 1.752–7 liability assumed by a partnership to reduce the partnerÊs outside basis in the partnership interest by the remaining amount of the section 1.752–7 liability (but not below the adjusted value of that interest) where there is a sale of the partnership interest, a liquidation of the partnership interest, or an assumption of the contingent liability by another partner. The proposed and temporary regulations contained in section 1.752–6T apply section 358(h) to partnerships for the period between October 18, 1999, and June 24, 2003. A public hearing on the proposed regulations is scheduled for October 14, 2003.

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