On January 11, 2024, the IRS publicly released Notice 2024-19, which provides relief from penalties under section 6722 of the Internal Revenue Code for failures to furnish correct payee statements solely for failure of a partnership with unrealized receivables or inventory items described in section 751(a) to furnish Part IV of Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, to the transferor and transferee in a section 751(a) exchange that occurred in calendar year 2023 by the due date specified in § 1.6050K-1(c)(1). In October 2023, the IRS released a revised version of Form 8308. Consistent with the requirements in Regulations section 1.6050K-1(c)(2), new Part IV of the 2023 Form 8308 requires a partnership to report, among other items, the partnership’s and the transferor partner’s share of section 751 gain and loss, collectibles gain under section 1(h)(5), and unrecaptured section 1250 gain under section 1(h)(6). Since the issuance of the revised Form 8308, concerns have been expressed to the Treasury Department and the IRS that many partnerships will be unable to furnish the information required in Part IV of the 2023 Form 8308 to transferors and transferees by the January 31, 2024 due date, because, in many cases, partnerships will not have all of the information required by Part IV of the 2023 Form 8308 by January 31, 2024. With respect to section 751(a) exchanges during calendar year 2023, the IRS will not impose penalties under section 6722 solely for failure to furnish Form 8308 with a completed Part IV by the due date specified in Regulations section 1.6050K-1(c)(1) for a partnership that (1) timely and correctly furnishes to the transferor and transferee a copy of Parts I, II, and III of Form 8308, or a statement that includes the same information, by the later of (a) January 31, 2024, or (b) 30 days after the partnership is notified of the section 751(a) exchange; and (2) furnishes to the transferor and transferee a copy of the complete Form 8308, including Part IV, or a statement that includes the same information and any additional information required under Regulations section 1.6050K-1(c), by the later of (a) the due date of the partnership’s Form 1065 (including extensions), or (b) 30 days after the partnership is notified of the section 751(a) exchange. The relief provided in Notice 2024-19 applies only with respect to furnishing Form 8308 to the transferor and transferee. Notice 2024-19 does not provide relief with respect to filing Form 8308 as an attachment to a partnership’s Form 1065; as such, Notice 2024-19 does not provide relief from penalties under section 6721 for failure to file correct information returns. Please see Notice 2024-19 PDF for more information. Notice 2024-19 applies only with respect to section 751(a) transfers. Consistent with the instructions to Form 1065, any income, gain, or loss to the partnership under section 751(b) is reported on Form 1065 Schedule K Line 11 and the partner’s share of this income, gain, or loss is reported on Schedule K-1 Box 11 Code L. Partnerships need not complete Form 8308 to report any income, gain or loss from a distribution under section 751(b).
