# Partner's Distributive Share; Correction
**AGENCY:**
Internal Revenue Service (IRS), Treasury.
**ACTION:**
Correcting amendments.
**SUMMARY:**
This document contains corrections to final regulations (TD 9398) that were published in the *Federal Register* on Monday, May 19, 2008 (73 FR 28699) providing rules for testing whether the economic effect of an allocation is substantial within the meaning of section 704(b) where partners are look-through entities or members of a consolidated group. The final regulations clarify the application of section 704(b) to partnerships the interests of which are owned by look-through entities and members of consolidated groups and, through an example, reiterate the effect of other provisions of the Internal Revenue Code on partnership allocations.
**DATES:**
This correction is effective June 12, 2008, and is applicable on May 19, 2008.
**FOR FURTHER INFORMATION CONTACT:**
Jonathan E. Cornwell and Kevin I. Babitz at (202) 622-3050 (not a toll-free number).
**SUPPLEMENTARY INFORMATION:**
**Background**
The final regulations that are the subject of this document are under section 704 of the Internal Revenue Code.
**Need for Correction**
As published, final regulations (TD 9398) contain errors that may prove to be misleading and are in need of clarification.
**List of Subjects in 26 CFR Part 1**
Income taxes, Reporting and recordkeeping requirements.
**26 CFR Part 1**
**Correction of Publication**
Accordingly, 26 CFR part 1 is corrected by making the following correcting amendments:
**PART 1—INCOME TAXES**
*Paragraph 1.* The authority citation for part 1 continues to read, in part, as follows:
**Authority:**
26 U.S.C. 7805 * * *
*Par. 2.* Section 1.704-1 is amended as follows:
1. In paragraph (b)(2)(iii)( *d* )( *3* ), the last sentence, the language “In the case of a controlled foreign corporation that is a look-through entity, the tax attributes to be taken into account are those of any person that is a United States shareholder (as defined in paragraph (b)(2)(iii)(d)(5) of this section) of the controlled foreign corporation, or, if the United States shareholder is a look-through entity, a United States person that owns an interest in such shareholder directly or indirectly through one or more look-through entities.” is removed and the language “In the case of a controlled foreign corporation that is a look-through entity, the tax attributes to be taken into account are those of any person that is a United States shareholder (as defined in paragraph (b)(2)(iii)( *d* )( *5* ) of this section) of the controlled foreign corporation, or, if the United States shareholder is a look-through entity, a United States person that owns an interest in such shareholder directly or indirectly through one or more look-through entities.” is added in its place.
2. In paragraph (b)(5) *Example 29* ., the fourth sentence, the language “C is a partnership with two partners, E, an individual, and F, a corporation that is member of a consolidated group within the meaning of § 1.1502-1(h).” is removed and the language “C is a partnership with two partners, E, an individual, and F, a corporation that is a member of a consolidated group within the meaning of § 1.1502-1(h).” is added in its place.
LaNita Van Dyke,
Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).