Section 864(c)(8) and tax treatment on sale of U.S. trade or business partnership interests on a look-through basis

Final and temporary regulations

The IRS this afternoon posted on its website a version of final and temporary regulations (T.D. 9919) as rules for determining the amount of gain or loss treated as effectively connected with the conduct of a trade or business within the United States—“effectively connected gain” or “effectively connected loss”—under section 864(c)(8).


The final and temporary regulations [PDF 284 KB] (51 pages) include rules to coordinate section 864(c)(8) with other relevant sections of the Code. According to the preamble, these final and temporary regulations retain the basic approach and structure of proposed regulations (December 2018) with certain revisions.

Section 864(c)(8) was added to the Code by the 2017 U.S. tax law (Pub. L. No. 115-97)—the law that is often referred to as the “Tax Cuts and Jobs Act” (TCJA). Today’s release finalizes the regulations that were proposed in December 2018; those proposed regulations referred to the Grecian Magnesite Mining case.

Today’s version of the final and temporary regulations includes the following statement:

This document is in the process of being submitted to the Office of the Federal Register (OFR) for publication and will be pending placement on public display at the OFR and publication in the Federal Register. The version of the final regulations released today may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register will be the official document.

The purpose of this report is to provide text of the regulations. 

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