U. S. Business Income Tax Return

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Instructions for Form 8308
(Rev. November 2025)

Use with the October 2024 revision of Form 8308
Report of a Sale or Exchange of Certain Partnership Interests
Section references are to the Internal Revenue Code unless
otherwise noted.

example, a transfer which in its entirety constitutes a gift for
federal income tax purposes isn’t a section 751(a) exchange.

Future Developments

A partnership may rely on a written statement from the
transferor that the transfer wasn’t a section 751(a) exchange
unless the partnership has knowledge to the contrary. If a
partnership is in doubt whether partnership property
constitutes unrealized receivables or inventory items or
whether a transfer constitutes a section 751(a) exchange, the
partnership may file Form 8308 to avoid the risk of incurring a
penalty for failure to file.

For the latest information about developments related to
Form 8308 and its instructions, such as legislation enacted
after they were published, go to IRS.gov/Form8308.

Change to requirement for providing transferors and
transferees with Part IV information. Partnerships are no
longer required to furnish to transferors and transferees by
January 31 the information in Part IV, Partner’s Share of Gain
(Loss) Required by Sections 751(a) and 1(h)(5) and (6).
However, partnerships still need to provide to transferors and
transferees by January 31 of the year following the tax year in
which the section 751(a) exchange occurred the information
in Parts I, II, and III. Form 8308 with all parts completed must
be filed with the partnership’s Form 1065.

When To File

Generally, file the completed Form 8308 (Parts I through IV)
as an attachment to Form 1065, U.S. Return of Partnership
Income, for the tax year of the partnership that includes the
last day of the calendar year in which the section 751(a)
exchange took place. Form 8308 is due at the time for filing
the partnership return, including extensions.

Situations That Require Filing Form 8308

A partnership must file a separate Form 8308 for each
section 751(a) exchange of an interest in such partnership.
See Regulations section 1.6050K-1.

Untimely or incorrect reporting of section 751(a) exchange by a partner to a BBA partnership. If a BBA
partnership is notified of a section 751(a) exchange after it
has filed its partnership return (and the time for filing a
superseding return has expired) and the amount of section
751(a) gain wasn’t reported on the transferor partner’s
Schedule K-1 (Form 1065), or if the section 751(a) exchange
was incorrectly reported, then the partnership must file an
administrative adjustment request (AAR) and include Form
8308 as an attachment. See the instructions for Forms 8082
and 1065-X for more information on filing an AAR. For
additional information, go to IRS.gov/BBAAAR. If the
partnership is still permitted to file a superseding return, it
may do so rather than file an AAR, before the due date of the
return, including extensions.

Note: Form 8308 doesn’t have to be filed if, under section
6045, Form 1099-B, Proceeds From Broker and Barter
Exchange Transactions, is required to be filed with respect to
the sale or exchange.

Note: A superseding return is a subsequent return filed
within the same filing period as the original return (including
extensions). In contrast, an amended return is a subsequent
return filed after the extended due date of the original return.

General Instructions
Purpose of Form

Form 8308 is filed by a partnership to report the sale or
exchange by a partner of all or part of a partnership interest
where any money or other property received in exchange for
the interest is attributable to unrealized receivables or
inventory items (that is, where there has been a section
751(a) exchange).

Who Must File

A partnership must file Form 8308 once the partnership
has notice of the section 751(a) exchange. The partnership
has such notice when either of the following occurs.
• The partnership receives written notification of the
exchange from the transferor that includes the names and
addresses of both parties to the exchange, the identifying
numbers of the transferor and (if known) of the transferee,
and the date of the exchange.
• The partnership has knowledge that there has been a
transfer of a partnership interest and, at the time of the
transfer, the partnership had any unrealized receivables or
inventory items.
No returns or statements are required under section
6050K if the transfer wasn’t a section 751(a) exchange. For
Oct 16, 2025

Untimely or incorrect reporting of section 751(a) exchange by partner to a non-BBA partnership. If a
non-BBA partnership is notified of a section 751(a) exchange
after it has filed its partnership return (and the time for filing a
superseding return has expired) and the amount of section
751(a) gain wasn’t reported on the transferor partner’s
Schedule K-1 or if the section 751(a) exchange was
incorrectly reported, then the partnership must file Form 8308
with an amended Form 1065 within 30 days of notification,
with the service center where Form 1065 was filed, and
provide amended Schedules K-1 to the affected partner(s). If
the partnership is within the time frame to file a superseding
return, it may do so rather than file an amended return.

Instructions for Form 8308 (Rev. 11-2025) Catalog Number 94665P
Department of the Treasury Internal Revenue Service www.irs.gov

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What’s New

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Non-filing of Form 8308 by the partnership. If a BBA or
non-BBA partnership didn't file Form 8308 with its Form 1065
but reported the correct section 751(a) gain (loss) on its
return and on its Schedule(s) K-1 issued to the relevant
partner(s), then the partnership must file Form 8308
separately and within 30 days of notification with the service
center where Form 1065 was filed. No AAR is needed for
BBA partnerships because there is no change to the
originally reported section 751(a) gain (loss) amount.

Incorrect reporting of section 751(a) exchange on
Schedule K-1 or K-3.
BBA partnership. If the partnership incorrectly reported
the section 751(a) exchange on Schedule K-1 and the period
for filing a superseding return has expired, the partnership
must file an AAR to make the correction. A correct Form 8308
that also correctly reports the gain should be attached to the
AAR. If the period for filing a superseding return has not yet
expired, the partnership may file a superseding return rather
than an AAR.
Non-BBA partnership. If the partnership incorrectly
reported the section 751(a) exchange on Schedule K-1 or
K-3 and the period for filing a superseding return has expired,
the partnership must file an amended return to make the
correction. A correct Form 8308 that also correctly reports
the gain should be attached to the amended return. If the
period for filing a superseding return has not yet expired, the
partnership may file a superseding return rather than an
amended return.

Form 8308, Parts I Through III, To Be Furnished to
Transferor and Transferee
All partnerships required to file Form 8308 must furnish a
Form 8308 with Parts I through III filled out to each transferor
and transferee by January 31 of the year following the
calendar year in which the section 751(a) exchange occurred
or, if later, 30 days after the partnership has notice of the
exchange.
Note: The Form 8308 filed by the partnership as an
attachment to Form 1065 must have Parts I through IV filled
out, but the Form 8308 the partnership provides to its
partners need only contain the information in Parts I through
III.
If a Form 8308 containing incorrect information is
furnished to the partner before Form 1065 with Schedule K-1
is filed, the partnership should notify the partner that the
Form 8308 was incorrect and notify the partner of the
corrections by the due date of the return, including
extensions. If the partner received a Form 8308 that isn’t
2

Note: The transferor of the interest is required to notify the
partnership of the exchange of the partnership interest
unless, under section 6045, Form 1099-B is required to be
filed.

Penalties
Penalties for failure to timely file correct Forms 8308.
Penalties may be imposed for each instance of failing to file a
correct Form 8308 by the due date, including extensions. The
penalties may be imposed for including incorrect information
or failing to include all required information. Penalties may be
waived if it is shown the failure was due to reasonable cause
and not willful neglect. See sections 6721 and 6724.
Increased penalties may apply for intentionally
disregarding the requirement to report correct information.
See section 6698.
Penalty for failure to furnish correct Forms 8308 to
transferor and transferee. A penalty may be imposed for
each failure to furnish when due a copy of Form 8308 to
either party to the exchange. The amount of the penalty may
also be imposed for each failure to give the transferor or
transferee all required information on each Form 8308 or for
furnishing incorrect information. If the partnership
intentionally disregards the requirement to report correct
information, each penalty is increased. The penalty will not
apply to any failure that the partnership can show was due to
reasonable cause and not willful neglect. See sections 6722
and 6724 for more details.

Instructions for Transferors

This form alerts transferors that they’re required to treat a
portion of the gain realized from a section 751(a) exchange
as ordinary income. For more details, see Pub. 541,
Partnerships.
Although partnerships aren't required to provide a
completed Part IV to transferors, partnerships must report to
transferors the information in column (c) of Part IV (that is, the
transferor’s section 751(a) gain (loss), section 1(h)(5)
collectibles gain, and section 1(h)(6) unrecaptured section
1250 gain) in box 20 of Schedule K-1 (Form 1065), using
codes AB, AC, and/or AD. See the Partner’s Instructions for
Schedule K-1 (Form 1065). In addition, for foreign
transferors, this information must also have been reported to
you in Schedule K-3, Part XIII. See the Partner’s Instructions
for Schedule K-3 (Form 1065). Even if this information is
required to be reported on multiple forms, it must only be
reported on the partner’s tax return once. If a transferor
receives information on a Schedule K-1 or K-3 that is
inconsistent with or has information missing from what is
reported on Form 8308, the transferor should rely on the
information on Schedule K-1 or K-3.
If a transferor receives Form 8308 after the Schedule K-1
or K-3 is received and Form 8308 is inconsistent with
Schedule K-1 or K-3, the transferor must contact the
partnership and determine whether a superseding return, an
amended partnership return (for a non-BBA partnership), or
an AAR (for a BBA partnership) has been filed with the IRS
by the partnership relating to the information reported on
Form 8308. If a superseding return, an amended Form 1065,
or an AAR has been filed, the transferor should secure a
Instructions for Form 8308 (Rev. Nov. 2025)

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Incorrect reporting of section 751(a) exchange on Form
8308 by partnership but correct reporting of section
751(a) exchange on Schedule K-1. If a BBA or non-BBA
partnership provided an incorrect Form 8308 to the transferor
and transferee by January 31 of the year following the
calendar year in which the section 751(a) exchange occurred
or, if later, 30 days after the partnership has notice of the
exchange, but the partnership corrected the reporting of the
section 751(a) exchange on the Schedule K-1 and provided a
correct Form 8308 with its Form 1065 filing, then the
partnership should provide a corrected Form 8308 to the
partners by the filing date of the Form 1065. No AAR or
amended return is needed because there is no change to the
Form 1065 filing.

consistent with the information that the partnership reports on
Schedule K-1 (Form 1065), then the partner should use the
information on Schedule K-1 and request a revised Form
8308 from the partnership if the partnership didn’t provide it.

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revised Schedule K-1 and Schedule K-3 (if applicable) or
Form 8986, Partner’s Share of Adjustment(s) to
Partnership-Related Item(s).
Note: A BBA partnership will only issue Forms 8986 in
instances where some or all of the adjustments reported by
the AAR don’t result in an imputed underpayment (IU) or
some or all of the adjustments do result in an IU but the
partnership makes an election to push out the adjustments in
lieu of paying the IU at the partnership level.

Separate Statement Required by Transferor
The transferor is required by Regulations section 1.751-1(a)
(3) to attach a statement to the transferor’s income tax return
for the tax year of the sale or exchange with the following
information.
• The date of the sale or exchange.
• The amount of any gain or loss attributable to the section
751(a) property.
• The amount of any gain or loss attributable to capital gain
or loss on the sale of the partnership interest.

Specific Instructions

A section 751(a) exchange occurs when money or any
property is exchanged for all or part of a partnership interest
that is attributable to unrealized receivables or inventory
items. Generally, any sale or exchange of a partnership
interest (or any portion) at a time when the partnership has
any unrealized receivables or inventory items is a section
751(a) exchange.

Unrealized Receivables
Unrealized receivables, to the extent not previously includible
in income under the partnership’s accounting method, are
any rights to payment for the following.
• Goods delivered or to be delivered, to the extent that the
payment would be treated as received for property other than
a capital asset.
• Services rendered or to be rendered.
Unrealized receivables also include the amount of gain
that would be ordinary income if any of the following types of
partnership property were sold on the date of the section
751(a) exchange.
• Mining property (section 617(f)(2)).
• Stock in an interest charge domestic international sales
corporation (section 992(a)).
• Farm recapture property or farmland (section 1252(a)).
• Franchises, trademarks, or trade names (section 1253(a)).
• Oil, gas, or geothermal property (section 1254).
• Stock of a controlled foreign corporation (section 1248).
• Section 1245 property.
• Section 1245 recovery property.
• Section 1250 property.
• Market discount bonds (section 1278).
• Short-term governmental obligations (section 1283).
• Other short-term obligations (section 1283(c)).

Instructions for Partnership

Inventory Items

Partnership address. Include the suite, room, or other unit
number after the street address. If the post office doesn’t
deliver mail to the street address and the partnership has a
P.O. box, show the box number instead.

Inventory items aren’t just stock in trade of the partnership.
They also include the following.
• Any properties that would be included in inventory if on
hand at the end of the tax year or that are held primarily for
sale to customers in the normal course of business.
• Any asset that isn’t a capital asset or isn’t treated as a
capital asset.
• Any other property held by the partnership that would be
considered inventory if held by the transferor partner.
• Any trade receivables of accrual method partnerships.

Parts I and II

For Parts I and II, provide the relevant information for the
beneficial owner or record holder of the partnership interest
immediately before the transfer (transferor) and immediately
after the transfer (transferee). If the transferor or transferee
record holder owns the interest on behalf of another person
as a nominee, an agent, or a custodian, complete the
information for the beneficial owner. If the identity of the
transferor or transferee beneficial owner is unknown, check
the box and complete the information for the record holder.
See Regulations section 1.6050K-1(a)(4)(iii). If the transferor
or transferee is a disregarded entity for federal income tax
purposes, list the first regarded owner of the partnership
interest as the beneficial owner. If the transferor or transferee
beneficial owner is also the record holder, don’t check the
box to provide the record holder information.
Check the box in Part I if the transferor beneficial owner of
the partnership interest is a foreign person. If the identity of
the transferor beneficial owner isn’t known, check this box if
the record holder is foreign.

Instructions for Form 8308 (Rev. Nov. 2025)

Tiered Partnerships
In determining whether partnership property is an unrealized
receivable or an inventory item, the partnership is treated as
owning its proportionate share of the property of any other
partnership in which it is a partner. See section 751(f).

Part III—Type of Partnership Interest Transferred

Check the box on Part III, line 2, that identifies the type of
interest the partner transferred in the partnership. For
purposes of Part III, line 2, the following apply.
• For boxes A and C, capital and profits interests are
determined in accordance with Regulations section
1.706-1(b)(4).

3

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If no amended Schedule K-1, Schedule K-3, or Form 8986
is secured from the partnership and the transferor is certain
that the Form 8308 is correct and that transferor should have
received a corrected Schedule K-1, Schedule K-3, or Form
8986, then the following apply.
• BBA partnership: the partner should affirmatively file Form
8082, Notice of Inconsistent Treatment or Administrative
Adjustment Request (AAR), because the partner is filing
inconsistently with the Schedule K-1 or K-3 received and is
relying on Form 8308.
• Non-BBA partnership: Form 8082 isn’t required if filing
inconsistently with a Schedule K-1 or K-3 received and
relying on Form 8308.

Section 751(a) Exchange

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• For box B, a preferred partnership interest is a partnership
interest having a preference in payment of distributions or on
liquidation over other partners.
• For box D, “other” means a partnership interest that isn’t
capital, profits, or preferred.

Part IV—Partner’s Share of Gain (Loss)
Required by Sections 751(a) and 1(h)(5) and (6)

Column (a). Partnership-level deemed sale gain (loss).
Report the entity-level computed gain (loss) for each of the
categories that are taxed at rates higher than the long-term
capital gain tax rates. In determining the section 751(a) hot
assets as required by Regulations section 1.751-1(a)(2), the
partnership is to compute the amount of gain or loss as if the
partnership had sold all of its property in a fully taxable
transaction for cash in an amount equal to the fair market
value of such property (taking into account section 7701(g))
immediately prior to the partner’s transfer of the interest in the
partnership. For calculations of gains from collectibles
assets, see Regulations section 1.1(h)-1(b)(2). For
calculations of unrecaptured section 1250 gain upon the sale
or exchange of a partnership interest, see Regulations
section 1.1(h)-1(b)(3).
Columns (b1) and (b2). Percentage interest and number
of units in the partnership transferred. Identify the
percentage interest or the number of units in the partnership
transferred. Enter either the percentage interest in the
partnership or the number of units in the partnership that the
partner transferred in column (b1) or (b2), respectively. If a
partnership is completing this part for a partner that is treated
as transferring an interest in the partnership because it
received a distribution but whose ownership interest in the
partnership remains unchanged, enter zero in column (b1) or
(b2) depending on whether the ownership interests in the
partnership are based on a percentage or units, respectively.
Column (c). Partner-level deemed sale gain (loss).
Report the partner’s allocable share of the amounts in
column (a) related to the portion of the interest that was sold.
The amounts in column (c) should be reported in box 20 of
the partner’s Schedule K-1(Form 1065), with the alpha code
listed.
If the transferor is foreign, the partnership may also be
required to complete Schedule K-3 (Form 1065), Part XIII.

4

A partner must generally report the results of the transfer
of a partnership interest on their related return. This may
include reporting the deemed sale section 751(a) gain or loss
on Form 4797, Sales of Business Property, and capital gain
or loss on Form 8949, Sales and Other Dispositions of
Capital Assets. Generally, see Schedule D (Form 1040),
Capital Gains and Losses, and its instructions for reporting by
individuals of any deemed sale collectibles gain or
unrecaptured section 1250 gain. However, see Schedule P
(Form 1040-NR), Foreign Partner’s Interests in Certain
Partnerships Transferred During Tax Year, for reporting by
nonresident aliens, foreign trusts, and foreign estates; and
Schedule P (Form 1120-F), List of Foreign Partner’s Interests
in Partnerships, for reporting by foreign corporations. If this is
an installment sale, see Form 6252.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You’re required to give us the
information. We need it to ensure that you’re complying with
these laws and to allow us to figure and collect the right
amount of tax. You aren’t required to provide the information
requested on a form that is subject to the Paperwork
Reduction Act unless the form displays a valid OMB control
number. Books or records relating to a form or its instructions
must be retained as long as their contents may become
material in the administration of any Internal Revenue law.
Generally, tax returns and return information are confidential,
as required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
burden for business taxpayers filing this form is approved
under OMB control number 1545-0123 and is included in the
estimates shown in the instructions for their business income
tax return.
Comments and suggestions. If you have suggestions
for making Form 8308 simpler, we would be happy to hear
from you. You can send us comments through IRS.gov/
FormComments. Or you can write to the Internal Revenue
Service, Tax Forms and Publications Division, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224.
Don’t send Form 8308 to this address. Instead, see When To
File, earlier.

Instructions for Form 8308 (Rev. Nov. 2025)

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The three categories reported in Part IV are:
• Section 751(a) hot assets (unrealized receivables and
inventory items gain (loss)),
• Collectibles gain under section 1(h)(5), and
• Unrecaptured section 1250 gain under section 1(h)(6).

See the Partnership Instructions for Schedules K-2 and K-3
(Form 1065). Even if the partnership must report this
information on multiple forms, the partner must report it only
once on its return.