I

103D CONGRESS

1ST SESSION H. R. 545

To amend the Internal Revenue Code of 1986 to provide that the provision

enacted as part of the Energy Policy Act of 1992 requiring the recognition of precontribution gain in the case of certain partnership distributions to a contributing partner shall be fully prospective, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 21, 1993

Mr. TORRICELLI introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

that the provision enacted as part of the Energy Policy

Act of 1992 requiring the recognition of precontribution

gain in the case of certain partnership distributions to

a contributing partner shall be fully prospective, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. MODIFICATION OF RULES REQUIRING REC2 OGNITION OF PRECONTRIBUTION GAIN IN

3 CASE OF CERTAIN PARTNERSHIP DISTRIBU4 TIONS TO CONTRIBUTING PARTNER.

5 (a) PROVISION TO BE PROSPECTIVE.—Subsection

6 (c) of section 1937 of the Energy Policy Act of 1992 is

7 amended by striking ‘‘distributions’’ and inserting ‘‘Prop8 erty contributed to a partnership’’.

9 (b) PRECONTRIBUTION GAIN DETERMINED WITH10 OUT NETTING LOSSES.—

11 (1) Subsection (b) of section 737 of such Code

12 is amended by striking ‘‘net gain’’ and inserting

13 ‘‘gain’’.

14 (2) Subsections (a) and (b) of section 737 of

15 such Code are each amended by striking ‘‘net

16 precontribution gain’’ each place it appears and in17 serting ‘‘precontribution gain’’.

18 (c) INTEREST CHARGE.—Section 737 of such Code

19 is amended by adding at the end thereof the following new

20 subsection:

21 ‘‘(e) INTEREST CHARGE IMPOSED ON GAIN RECOG22 NIZED.—

23 ‘‘(1) IN GENERAL.—If any portion of the gain

24 recognized under subsection (a) for any taxable year

25 is attributable to property contributed prior to such

26 taxable year, the taxpayer’s tax imposed by this
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1 chapter for such taxable year shall be increased by

2 the aggregate of the additional amounts determined

3 under paragraph (2) with respect to each such prop4 erty.

5 ‘‘(2) ADDITIONAL AMOUNT.—For purposes of

6 paragraph (1), the additional amount with respect to

7 any property shall be equal to the aggregate amount

8 of interest (determined at the rate applicable under

9 section 6621(a)(2) for the month with or within

10 which any taxable year ends) that would accrue—

11 ‘‘(A) on an amount equal to the deferred

12 tax liability for the taxable year which is attrib13 utable to such property,

14 ‘‘(B) during the period—

15 ‘‘(i) ending on the due date for filing

16 the return for such taxable year (deter17 mined without regard to extensions), and

18 ‘‘(ii) beginning on the due date for fil19 ing the return for the taxable year (deter20 mined without regard to extensions) of the

21 taxpayer during which the property was

22 contributed.

23 ‘‘(3) DEFERRED TAX LIABILITY.—For purposes

24 of paragraph (2), the term ‘deferred tax liability’
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1 means, with respect to any property, the product

2 of—

3 ‘‘(A) the amount of gain recognized under

4 subsection (a) with respect to such property,

5 and

6 ‘‘(B) the maximum rate of tax in effect

7 under section 1 or 11, whichever is appropriate,

8 for the taxable year of the taxpayer during

9 which such property was contributed.

10 ‘‘(4) SPECIAL RULE.—Any increase in tax

11 under subsection shall not be treated as a tax im12 posed by this chapter for purposes of—

13 ‘‘(A) determining the amount of any credit

14 allowable under this chapter, and

15 ‘‘(B) determining the amount of the tax

16 imposed by section 55.’’

17 (d) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect as if included in the amend19 ments made by section 1937 of the Energy Policy Act of

20 1992 on the date of the enactment of such Act.

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