26 U.S.C. § 702: Income and credits of partner

gains and losses from sales or exchanges of capital assets held for not more than 1 year, gains and losses from sales or exchanges of capital assets held for more than 1 year, gains and losses from sales or exchanges of property described in section 1231 (relating to certain property used in a trade or business and involuntary conversions), charitable contributions (as defined in section 170(c)), dividends with respect to which section 1(h)(11) or part VIII of subchapter B applies, taxes, described in section 901, paid or accrued to foreign countries and to possessions of the United States, other items of income, gain, loss, deduction, or credit, to the extent provided by regulations prescribed by the Secretary, and taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection. The character of any item of income, gain, loss, deduction, or credit included in a partner’s distributive share under paragraphs (1) through (7) of subsection (a) shall be determined as if such item were realized directly from the source from which realized by the partnership, or incurred in the same manner as incurred by the partnership. In any case where it is necessary to determine the gross income of a partner for purposes of this title, such amount shall include his distributive share of the gross income of the partnership. For rules relating to procedures for determining the tax treatment of partnership items see subchapter C of chapter 63 (section 6221 and following). Except as provided in paragraph (2), the amendments made by sections 402, 403, and 404 [enacting sections 6221 to 6234 of this title and section 1508 of Title 28 , Judiciary and Judicial Procedure, amending this section and sections 6031, 6213, 6216, 6422, 6501, 6504, 6511, 6512, 6515, 7422, 7451, 7456, 7459, 7482, and 7485 of this title and section 1346 of Title 28 , and enacting provisions set out as a note under section 6031 of this title ] shall apply to partnership taxable years beginning after the date of the enactment of this Act [ Sept. 3, 1982 ]. [Former] Section 6232 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall apply to periods after December 31, 1982 . The amendments made by sections 402, 403, and 404 shall apply to any partnership taxable year (or in the case of [former] section 6232 of such Code, to any period) ending after the date of the enactment of this Act [ Sept. 3, 1982 ] if the partnership, each partner, and each indirect partner requests such application and the Secretary of the Treasury or his delegate consents to such application.”