52 STAT.] 75TH CONG. , 3 D SESS.-CH. 289-MAY 28, 1938 (2) EXCEPTION. -If the taxable year of the common trust fund Exception. begins before January 1, 1938, and the taxable year of a partici- pant begins after December 31, 1937, the computation of the net income of the common trust fund, and the inclusions with respect to the common trust fund net income, in computing the net income of such participant, shall be made by the method pro- vided in section 169 of the Revenue Act of 1936, and not by the 49 Stat. 1708. method provided in subsections (c) and (d) of this section. Supplement F-Partnerships SEC. 181. PARTNERSHIP NOT TAXABLE. Individuals carrying on business in partnership shall be liable for income tax only in their individual capacity. SEC. 182. TAX OF PARTNERS. In computing the net income of each partner, he shall include, whether or not distribution is made to him- (a) As a part of his short-term capital gains or losses, his dis- tributive share of the net short-term capital gain or loss of the partnership. (b) As a part of his long-term capital gains or losses, his distrib- utive share of the net long-term capital gain or loss of the partnership. (c) His distributive share of the ordinary net income or the ordi- nary net loss of the partnership, computed as provided in section 183 (b). SEC. 183. COMPUTATION OF PARTNERSHIP INCOME. (a) GENERAL RuTLE.- The net income of the partnership shall be computed in the same manner and on the same basis as in the case of an individual, except as provided in subsections (b) and (c). (b) SEGREGATION OF ITEMS.- (1) CAPITAL GAINS AND LOSSES.-There shall be segregated the short-term capital gains and losses and the long-term capital gains and losses, and the net short-term capital gain or loss and the net long-term capital gain or loss shall be computed. (2) ORDINARY NET INCOME OR LOSS.- After excluding all items of either short-term or long-term capital gain or loss, there shall be computed- (A) An ordinary net income which shall consist of the excess of the gross income over the deductions; or (B) An ordinary net loss which shall consist of the excess of the deductions over the gross income. (c) CHARITABLE CONTRIBUTIONS.- In computing the net income of the partnership the so-called "charitable contribution" deduction allowed by section 23 (o) shall not be allowed; but each partner shall be considered as having made payment, within his taxable year, of his distributive portion of any contribution or gift, pay- ment of which was made by the partnership within its taxable year, of the character which would be allowed to the partnership as a deduction under such section if this subsection had not been enacted. SEC. 184. CREDITS AGAINST NET INCOME. Partnerships. Partnership not taxable. Individual liability. Tax of partners. Computation. Computation of partnership income. General rule. Segregation ofitems. Capital gains and losses. Ordinary net in- come or loss. Charitable contri- butions. Ante, p. 463. The partner shall, for the purpose of the normal tax, be allowed Credits against net as a credit against his net income, in addition to the credits allowed to him under section 25, his proportionate share of such amounts Ant, p 466. (not in excess of the net income of the partnership) of interest specified in section 25 (a) as are received by the partnership. 521
�
