§ 709. Treatment of organization and syndication fees

• (a) Except as provided in subsection (b), no deduction shall be allowed under this chapter to the partnership or to any partner for any amounts paid or incurred to organize a partnership or to promote the sale of (or to sell) an interest in such partnership.
• (b)
  • (1) If a partnership elects the application of this subsection (in accordance with regulations prescribed by the Secretary) with respect to any organizational expenses—
    • (A) the partnership shall be allowed a deduction for the taxable year in which the partnership begins business in an amount equal to the lesser of—
      • (i) the amount of organizational expenses with respect to the partnership, or
      • (ii) $5,000, reduced (but not below zero) by the amount by which such organizational expenses exceed $50,000, and
    • (B) the remainder of such organizational expenses shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the partnership begins business.
  • (2) In any case in which a partnership is liquidated before the end of the period to which paragraph (1)(B) applies, any deferred expenses attributable to the partnership which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.
  • (3) The organizational expenses to which paragraph (1) applies, are expenditures which—
    • (A) are incident to the creation of the partnership;
    • (B) are chargeable to capital account; and
    • (C) are of a character which, if expended incident to the creation of a partnership having an ascertainable life, would be amortized over such life.