SECTION 7. DETERMINING THE

AMOUNT OF PARTNERSHIP LIABILITIES INCLUDED IN AMOUNT REALIZED

.01 In General

The Treasury Department and the IRS intend to issue regulations providing that a transferee may rely upon a certification described in section 7.02 or section 7.03 of this notice to determine the amount of liabilities of the partnership that are included in the amount realized on a transfer for purposes of section 1446(f), unless the transferee has actual knowledge that the certification is incorrect or unreliable.

.02 Transferor Certification

A transferor that is not a controlling partner (as defined below) may provide to the transferee a certification (signed under penalties of perjury and including a U.S. TIN, to the extent required under section 4.01 of this notice) that provides (i) the amount of the transferor’s share of partnership liabilities reported on the most recently received Schedule K-1 (Form 1065) from the partnership, for a partnership taxable year that closed no more than 10 months before the date of transfer, and (ii) that the transferor does not have actual knowledge of events occurring after the Schedule K-1 (Form 1065) was issued

that would cause the amount of the transferor’s share of partnership liabilities at the time of the transfer to be significantly different than the amount shown on the Schedule K-1 (Form 1065). A difference in the amount of the transferor’s share of partnership liabilities of 25 percent or less is not a significant difference. A transferor is a controlling partner for purposes of this section 7.02 if the transferor (and related persons) owned a 50 percent or greater interest in capital, profits, deductions or losses in the 12 months before the transfer.

.03 Partnership Certification

The partnership may issue a certification, signed under penalties of perjury, no earlier than 30 days before the transfer, that provides (i) the amount of the transferor’s share of partnership liabilities, which may be the amount reported on the most recently prepared Schedule K-1 (Form 1065), and (ii) that the partnership does not have actual knowledge of events occurring after its determination of the amount of the transferor’s share of partnership liabilities that would cause the amount of the transferor’s share of partnership liabilities at the time of the transfer to be significantly different than the amount shown on the certification provided to the transferee. A difference in the amount of the transferor’s share of partnership liabilities of 25 percent or less is not a significant difference.