# § 709. Treatment of organization and syndication fees
**(a)** **General rule** 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)** **Deduction of organization fees**
**(1)** **Allowance of deduction** 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)** **Dispositions before close of amortization period** 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)** **Organizational expenses defined** 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.
---
**Source Credit**: (Added Pub. L. 94–455, title II, § 213(b)(1), Oct. 4, 1976, 90 Stat. 1547; amended Pub. L. 108–357, title VIII, § 902(c), Oct. 22, 2004, 118 Stat. 1651; Pub. L. 109–135, title IV, § 403(*ll*), Dec. 21, 2005, 119 Stat. 2632.)
## Editorial Notes
### Amendments
2005—Subsec. (b)(1). substituted “partnership” for “taxpayer” in introductory provisions and before “shall be allowed” in subpar. (A).
2004—Subsec. (b). substituted “Deduction” for “Amortization” in heading, added par. (2), redesignated former par. (2) as (3), and amended heading and text of par. (1) generally. Prior to amendment, text of par. (1) read as follows: “Amounts paid or incurred to organize a partnership may, at the election of the partnership (made in accordance with regulations prescribed by the Secretary), be treated as deferred expenses. Such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the partnership (beginning with the month in which the partnership begins business), or if the partnership is liquidated before the end of such 60-month period, such deferred expenses (to the extent not deducted under this section) may be deducted to the extent provided in section 165.”
## Statutory Notes and Related Subsidiaries
### Effective Date of 2005 Amendment
Amendment by effective as if included in the provision of the American Jobs Creation Act of 2004, , to which such amendment relates, see , set out as a note under .
### Effective Date of 2004 Amendment
Amendment by applicable to amounts paid or incurred after , see , set out as a note under .
### Effective Date
> **“(1)** **In general.—** Except as otherwise provided in this subsection, the amendments made by this section [enacting this section and amending sections 179, 704, 706, 707, and 761 of this title] shall apply in the case of partnership taxable years beginning after December 31, 1975.
>
> **“(2)** **Subsection (e).—** The amendment made by subsection (e) [amending section 704 of this title] shall apply to liabilities incurred after December 31, 1976.
>
> **“(3)** **Section 709(b) of the code.—** Section 709(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by the amendment made by subsection (b)(1) of this section) shall apply in the case of amounts paid or incurred in taxable years beginning after December 31, 1976.”
, , , as amended by , , , provided that: