The Treasury Department and the Internal Revenue Service (IRS) recently finalized regulations under Section 6050K that provide meaningful taxpayer relief from reporting requirements for a transferor partner’s share of gain or loss from hot assets under Section 751 (inventory and unrealized receivables), unrecaptured Section 1250 gain, and collectibles gain from the sale of partnership interests (the “transferor’s share information”).
Previously, partnerships were required to furnish and report the transferor’s share information in Part IV of Form 8308, “Report of a Sale or Exchange of Certain Partnership Interests,” by January 31. Under the final regulations, that information may be provided as late as when the partnership provides Schedule K-1s to its partners. As a reminder, this reporting requirement applies to the portion of a transaction treated as a sale of partnership interests for tax purposes, including a disguised sale.
The issue arose after the IRS and the Treasury Department revised the reporting rules in 2020 and, in 2023, added Part IV to Form 8308. Under that framework, partnerships were required to provide the transferor’s share information to transferor partners by January 31 of the year following the sale of partnership interests or, if later, 30 days after the partnership received notice of the transfer. Practitioners criticized the rules as impractical because the calculation of such information is often complex and depends on end-of-year information that is not yet available by January 31.
In addition, other complex partnership calculations are not required to be provided before completion of the partnership’s Form 1065 and Schedule K-1s, making the earlier deadline for reporting the transferor’s share information difficult to justify. The IRS acknowledged those concerns by issuing temporary relief for failures to timely furnish Part IV in 2023 and 2024.
The final regulations adopt the proposed regulations issued in 2025 without change and remove the requirement to provide the transferor’s share information by January 31. Partnerships must still provide the information with the partnership’s Form 1065 and Schedule K-1s.
The final regulations are effective May 20, 2026, and they apply to taxable years ending on or after that date. Partnerships may rely on these rules for exchanges occurring on or after January 1, 2025.
For completeness, we note that the information required under Parts I–III of Form 8308 is still required to be provided by January 31 following the year of a sale, but, given that only basic administrative information is required to be provided, this should not pose onerous compliance burdens.
If you have any questions, or would like additional information, please contact one of the attorneys on our Federal & International Tax team.
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