# Internal Revenue Service > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A3d41a74293c508bb ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Internal Revenue Service Department of the Treasury Number: 202636011 Release Date: 9/4/2026 Third Party Communication: None Date of Communication: Not Applicable Washington, DC 20224 Index Number: 7704.00-00 Person To Contact: ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------, ID No. ----------------Telephone Number: --------------------Refer Reply To: PT&E:B01 PLR-120171-25 Date: June 08, 2026 LEGEND Company = --------------------------------------------------------------------------------------------------------------------State = ------------- Dear -----------: This letter responds to a letter dated December 6, 2025, submitted on behalf of Company by Company’s authorized representatives, requesting rulings under § 7704 of the Internal Revenue Code (Code). FACTS Company is a corporation formed under the laws of State. According to the submission, Company provides a venue for the buying and selling of limited partnership interests through a Matching Service that is intended to satisfy the requirements under § 1.7704-1(g) of the Income Tax Regulations to be a qualified matching service. Company represents that the Matching Service is not: (i) a national securities exchange registered under § 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f) (1934 Act); (ii) a national securities exchange exempt from registration under the 1934 Act PLR-120171-25 2 because of the limited volume of transactions; (iii) a foreign securities exchange that, under the law of the jurisdiction where it is organized, satisfies regulatory requirements that are analogous to the regulatory requirements under the 1934 Act; (iv) a regional or local exchange; or (v) an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise. DESCRIPTION OF THE MATCHING SERVICE The Matching Service is an online platform that is only accessible by clients of Company who are partners of participating partnerships and prospective buyers that have been approved by the applicable general partner or service provider and have been provided custom log-in credentials that permit access to the Matching Service. The Matching Service is not accessible by members of the general public. The Matching Service operates as follows. When a partnership interest is listed on the Matching Service (a Listing), the Listing displays that the interest is available for sale without accompanying price information. During the first 15 calendar days following the initial listing of a partnership interest, the seller may view non-firm quotes or indications of interest from prospective buyers. Neither the act of creating a Listing nor the placing of a bid or offer by a prospective buyer is a binding commitment to sell a partnership interest. The seller may not enter into a binding contract to sell its interest to any prospective buyer until after the 15th calendar day after the Listing was initially posted. Following the initial 15-day period, the seller is permitted to select its preferred bid. At that point, the seller and the buyer with the preferred bid are “matched” and may enter into an agreement of purchase and sale. A transaction only becomes binding when an agreement of purchase and sale is concluded between the prospective buyer and seller. Following a match of a seller to a buyer, the Matching Service provides automatically generated closing documentation for each party’s review and comment; however, the closing of any sale of an interest through the Matching Service, whether by way of (1) passage of title of the interest, (2) payment of the purchase price for the interest, or (3) advancement, loan or other arrangement for funds to be available to the seller in anticipation of payment of the purchase price, is not permitted to occur prior to the 45th calendar day after the date the Listing was initially posted. The Matching Service automatically keeps contemporaneous records of all activities that occur via the Matching Service, including the 15-day and 45-day timing requirements described above. Additionally, each seller’s information is removed from the Matching Service within 120 calendar days after the date the Listing was initially posted, and following any removal (other than removal by reason of a sale of any part of the interest) of the seller’s information from the Matching Service, no offer to sell an interest in the partnership can be entered into the Matching Service by the seller for at least 60 calendar days. PLR-120171-25 3 The Matching Service will automatically calculate the percentage of interests in a partnership transferred in a taxable year of the partnership and will not allow more than 10% of the total interests in partnership capital or profits to be traded in a given taxable year. LAW Section 7704(a) provides that, except as provided in § 7704(c), a publicly traded partnership shall be treated as a corporation. Section 7704(b) provides that, for purposes of § 7704, the term “publicly traded partnership” means any partnership if — (1) interests in such partnership are traded on an established securities market, or (2) interests in such partnerships are readily tradable on a secondary market (or the substantial equivalent thereof). Section 1.7704-1(b) provides, in part, that for purposes of § 7704(b) and § 1.7704-1, an established securities market includes — (1) A national securities exchange registered under § 6 of the 1934 Act; (2) A national securities exchange exempt from registration under § 6 of the 1934 Act because of the limited volume of transactions; (3) A foreign securities exchange that, under the law of the jurisdiction where it is organized, satisfies regulatory requirements that are analogous to the regulatory requirements under the 1934 Act; (4) A regional or local exchange; and (5) An interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise. Section 1.7704-1(c)(1) provides that, for purposes of § 7704(b) and § 1.7704-1, interests in a partnership that are not traded on an established securities market (within the meaning of § 7704(b) and § 1.7704-1(b)) are readily tradable on a secondary market or the substantial equivalent thereof if, taking into account all of the facts and circumstances, the partners are readily able to buy, sell, or exchange their partnership interests in a manner that is comparable, economically, to trading on an established securities market. Section 1.7704-1(g)(1) provides that for purposes of § 7704(b) and § 1.7704-1, the transfer of an interest in a partnership through a qualified matching service is disregarded in determining whether interests in the partnership are readily tradable on a secondary market or the substantial equivalent thereof. Section 1.7704-1(g)(2) provides that a matching service is a qualified matching service only if — (i) The matching service consists of a computerized or printed listing system that lists customers' bid and/or ask quotes in order to match partners who want to sell their interests in a partnership (the selling partner) with persons who want to buy those interests; (ii) Matching occurs either by matching the list of interested buyers with the list of interested sellers or through a bid and ask process that allows interested buyers to bid on the listed interest; (iii) The selling partner cannot enter into a binding agreement to sell the interest until the 15th calendar day after the date information regarding the PLR-120171-25 4 offering of the interest for sale is made available to potential buyers and such time period is evidenced by contemporaneous records ordinarily maintained by the operator at a central location; (iv) The closing of the sale effected by virtue of the matching service does not occur prior to the 45th calendar day after the date information regarding the offering of the interest for sale is made available to potential buyers and such time period is evidenced by contemporaneous records ordinarily maintained by the operator at a central location; (v) The matching service displays only quotes that do not commit any person to buy or sell a partnership interest at the quoted price (non-firm price quotes) or quotes that express interest in partnership interest without an accompanying price (nonbinding indications of interest) and does not display quotes at which any person is committed to buy or sell a partnership interest at the quoted price (firm quotes); (vi) The selling partner's information is removed from the matching service within 120 calendar days after the date information regarding the offering of the interest for sale is made available to potential buyers and, following any removal (other than removal by reason of a sale of any part of such interest) of the selling partner's information from the matching service, no offer to sell an interest in the partnership is entered into the matching service by the selling partner for at least 60 calendar days; and (vii) The sum of the percentage interests in partnership capital or profits transferred during the taxable year of the partnership (other than in private transfers described in § 1.7704-1(e)) does not exceed 10 percent of the total interests in partnership capital or profits. Section 1.7704-1(g)(3) provides that for purposes of § 1.7704-1(g)(2)(iv), the closing of a sale occurs no later than the earlier of — (i) The passage of title to the partnership interest; (ii) The payment of the purchase price (which does not include the delivery of funds to the operator of the matching service or other closing agent to hold on behalf of the seller pending closing); or (iii) The date, if any, that the operator of the matching service (or any person related to the operator within the meaning of § 267(b) or § 707(b)(1)) loans, advances, or otherwise arranges for funds to be available to the seller in anticipation of the payment of the purchase price. Section 1.7704-1(g)(4) provides, in part, that a qualified matching service may offer the following features — (i) The matching service may provide prior pricing information, including information regarding resales of interests and actual prices paid for interests; a description of the business of the partnership; financial and reporting information from the partnership's financial statements and reports; and information regarding material events involving the partnership, including special distributions, capital distributions, and refinancings or sales of significant portions of partnership assets; (ii) The operator may assist with the transfer documentation necessary to transfer the partnership interest; (iii) The operator may receive and deliver funds for completed transactions; and (iv) The operator's fee may consist of a flat fee for use of the service, a fee or commission based on completed transactions, or any combination thereof. PLR-120171-25 5 CONCLUSION Based solely on the submitted facts and representations, we rule as follows: 1) The Matching Service is not an established securities market under § 1.7704-1(b) for purposes of § 7704. 2) The Matching Service meets the requirements to be a qualified matching service under § 1.7704-1(g). 3) A partnership whose interests are posted or offered for purchase or sale on the Matching Service will not be considered to be publicly traded for purposes of § 7704(b) solely by reason of being offered for purchase or sale and/or sold through the Matching Service and may rely on this ruling provided (a) it is not revoked, (b) that the sum of the partnership interests transferred during the taxable year of the partnership (other than through private transfers described in § 1.7704-1(e)) does not exceed 10 percent of the total interests in partnership capital or profits determined as provided in § 1.7704-1(k), and (c) the Matching Service continues to operate in a manner consistent with the facts as represented. Maintenance of information required to permit a partnership to make the calculations, and the actual making of the calculations, relating to qualification for any applicable safe harbor in § 1.7704-1 will be the sole responsibility of the partnerships whose interests are traded and not the responsibility of Company. Except as specifically ruled upon above, we express or imply no opinion concerning the federal tax consequences of this transaction under any other provisions of the Code. This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent. The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the requested rulings, it is subject to verification on examination. In accordance with a power of attorney on file with this office, we are sending a copy of this letter to Company’s authorized representative. Sincerely, _____________________________ Joy C. Spies Senior Technician Reviewer, Branch 1 Office of the Associate Chief Counsel (Passthroughs, Trusts, and Estates) PLR-120171-25 cc: -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 6 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A3d41a74293c508bb. Public record. Not legal advice.