Repeal of rules relating to certain liquidating distributions

(a) In general Subpart B of part II of subchapter K of chapter 1 is amended by striking section 736 (and by striking the item relating to such section in the table of sections for such subpart). (b) Retired partners and successors in interest of deceased partners treated as partners until liquidation Section 761(d) is amended by adding at the end the following: For purposes of this subchapter, any retired partner or any deceased partner’s successor in interest shall be treated as a partner until the complete liquidation of such retired partner's or successor's interest in the partnership.. (c) Conforming amendments (1) Section 357(c)(3)(A) is amended by striking payment of which either— and all that follows through then, for purposes of and inserting payment of which would give rise to a deduction, then, for purposes of. (2) Section 731(d) is amended— (A) by striking section 736 (relating to payments to a retiring partner or a deceased partner’s successor in interest),, and (B) by striking items), and and inserting items) and. (3) Section 751(b)(2) is amended to read as follows: (2) Exception Paragraph (1) shall not apply to a distribution of property which the distributee contributed to the partnership.. (4) (A) Section 753 is amended by striking The amount includible and all that follows and inserting For treatment of income in respect of a decedent, see section 691. (B) Section 691 is amended by striking subsection (e). (d) Effective date The amendments made by this section shall apply to partners retiring or dying after the date of the enactment of this Act.