I 

117TH CONGRESS 

2D SESSION H. R. 6763 

To amend the Internal Revenue Code of 1986 to lower the corporate tax 

rate for small businesses and close the carried interest loophole, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 18, 2022 

Ms. CRAIG 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 lower the 

corporate tax rate for small businesses and close the 

carried interest loophole, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Tax 

5 Relief Act’’. 

6 SEC. 2. GRADUATED CORPORATE TAX RATE TO SUPPORT 

7 SMALL BUSINESSES. 

8 (a) IN GENERAL.—Section 11(b) of the Internal Rev9 enue Code of 1986 is amended to read as follows: 


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1 ‘‘(b) AMOUNT OF TAX.— 

2 ‘‘(1) IN GENERAL.—Except as provided by 

3 paragraph (2), the amount of the tax imposed by 

4 subsection (a) shall be 21 percent of taxable income. 

5 ‘‘(2) SMALL BUSINESSES.—In the case of a cor6 poration with taxable income that does not exceed 

7 $5,000,000 in the taxable year, the amount of the 

8 tax imposed by subsection (a) shall be the sum of— 

9 ‘‘(A) 18 percent of so much of the taxable 

10 income as does not exceed $400,000, and 

11 ‘‘(B) 21 percent of so much of the taxable 

12 income as equals or exceeds $400,000.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to taxable years ending after the 

15 date of the enactment of this section. 

16 SEC. 3. PARTNERSHIP INTERESTS TRANSFERRED IN CON17 NECTION WITH PERFORMANCE OF SERVICES. 

18 (a) MODIFICATION TO ELECTION TO INCLUDE PART19 NERSHIP INTEREST IN GROSS INCOME IN YEAR OF

20 TRANSFER.—Subsection (c) of section 83 of the Internal 

21 Revenue Code of 1986 is amended by redesignating para22 graph (4) as paragraph (5) and by inserting after para23 graph (3) the following new paragraph: 

24 ‘‘(4) PARTNERSHIP INTERESTS.—Except as 

25 provided by the Secretary— 


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1 ‘‘(A) IN GENERAL.—In the case of any 

2 transfer of an interest in a partnership in con3 nection with the provision of services to (or for 

4 the benefit of) such partnership— 

5 ‘‘(i) the fair market value of such in6 terest shall be treated for purposes of this 

7 section as being equal to the amount of the 

8 distribution which the partner would re9 ceive if the partnership sold (at the time of 

10 the transfer) all of its assets at fair market 

11 value and distributed the proceeds of such 

12 sale (reduced by the liabilities of the part13 nership) to its partners in liquidation of 

14 the partnership, and 

15 ‘‘(ii) the person receiving such interest 

16 shall be treated as having made the elec17 tion under subsection (b)(1) unless such 

18 person makes an election under this para19 graph to have such subsection not apply. 

20 ‘‘(B) ELECTION.—The election under sub21 paragraph (A)(ii) shall be made under rules 

22 similar to the rules of subsection (b)(2).’’. 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to interests in partnerships transVerDate Sep 11 2014 03:11 Feb 26, 2022 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6763.IH H6763

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1 ferred in taxable years ending after the date of the enact2 ment of this Act. 

3 SEC. 4. SPECIAL RULES FOR PARTNERS PROVIDING IN4 VESTMENT MANAGEMENT SERVICES TO 

5 PARTNERSHIPS. 

6 (a) IN GENERAL.—Part I of subchapter K of chapter 

7 1 of the Internal Revenue Code of 1986 is amended by 

8 adding at the end the following new section: 

9 ‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING IN10 VESTMENT MANAGEMENT SERVICES TO 

11 PARTNERSHIPS. 

12 ‘‘(a) TREATMENT OF DISTRIBUTIVE SHARE OF

13 PARTNERSHIP ITEMS.—For purposes of this title, in the 

14 case of an investment services partnership interest— 

15 ‘‘(1) IN GENERAL.—Notwithstanding section 

16 702(b)— 

17 ‘‘(A) an amount equal to the net capital 

18 gain with respect to such interest for any part19 nership taxable year shall be treated as ordi20 nary income, and 

21 ‘‘(B) subject to the limitation of paragraph 

22 (2), an amount equal to the net capital loss 

23 with respect to such interest for any partner24 ship taxable year shall be treated as an ordi25 nary loss. 


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1 ‘‘(2) RECHARACTERIZATION OF LOSSES LIM2 ITED TO RECHARACTERIZED GAINS.—The amount 

3 treated as ordinary loss under paragraph (1)(B) for 

4 any taxable year shall not exceed the excess (if any) 

5 of— 

6 ‘‘(A) the aggregate amount treated as ordi7 nary income under paragraph (1)(A) with re8 spect to the investment services partnership in9 terest for all preceding partnership taxable 

10 years to which this section applies, over 

11 ‘‘(B) the aggregate amount treated as or12 dinary loss under paragraph (1)(B) with re13 spect to such interest for all preceding partner14 ship taxable years to which this section applies. 

15 ‘‘(3) ALLOCATION TO ITEMS OF GAIN AND

16 LOSS.— 

17 ‘‘(A) NET CAPITAL GAIN.—The amount 

18 treated as ordinary income under paragraph 

19 (1)(A) shall be allocated ratably among the 

20 items of long-term capital gain taken into ac21 count in determining such net capital gain. 

22 ‘‘(B) NET CAPITAL LOSS.—The amount 

23 treated as ordinary loss under paragraph (1)(B) 

24 shall be allocated ratably among the items of 

25 long-term capital loss and short-term capital 


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1 loss taken into account in determining such net 

2 capital loss. 

3 ‘‘(4) TERMS RELATING TO CAPITAL GAINS AND

4 LOSSES.—For purposes of this section— 

5 ‘‘(A) IN GENERAL.—Net capital gain, long6 term capital gain, and long-term capital loss, 

7 with respect to any investment services partner8 ship interest for any taxable year, shall be de9 termined under section 1222, except that such 

10 section shall be applied— 

11 ‘‘(i) without regard to the recharacter12 ization of any item as ordinary income or 

13 ordinary loss under this section, 

14 ‘‘(ii) by only taking into account items 

15 of gain and loss taken into account by the 

16 holder of such interest under section 702 

17 (other than subsection (a)(9) thereof) with 

18 respect to such interest for such taxable 

19 year, and 

20 ‘‘(iii) by treating property which is 

21 taken into account in determining gains 

22 and losses to which section 1231 applies as 

23 capital assets held for more than 1 year. 

24 ‘‘(B) NET CAPITAL LOSS.—The term ‘net 

25 capital loss’ means the excess of the losses from 


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1 sales or exchanges of capital assets over the 

2 gains from such sales or exchanges. Rules simi3 lar to the rules of clauses (i) through (iii) of 

4 subparagraph (A) shall apply for purposes of 

5 the preceding sentence. 

6 ‘‘(5) SPECIAL RULE FOR DIVIDENDS.—Any div7 idend allocated with respect to any investment serv8 ices partnership interest shall not be treated as 

9 qualified dividend income for purposes of section 

10 1(h). 

11 ‘‘(6) SPECIAL RULE FOR QUALIFIED SMALL

12 BUSINESS STOCK.—Section 1202 shall not apply to 

13 any gain from the sale or exchange of qualified small 

14 business stock (as defined in section 1202(c)) allo15 cated with respect to any investment services part16 nership interest. 

17 ‘‘(b) DISPOSITIONS OF PARTNERSHIP INTERESTS.— 

18 ‘‘(1) GAIN.— 

19 ‘‘(A) IN GENERAL.—Any gain on the dis20 position of an investment services partnership 

21 interest shall be— 

22 ‘‘(i) treated as ordinary income, and 

23 ‘‘(ii) recognized notwithstanding any 

24 other provision of this subtitle. 


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1 ‘‘(B) GIFT AND TRANSFERS AT DEATH.— 

2 In the case of a disposition of an investment 

3 services partnership interest by gift or by rea4 son of death of the taxpayer— 

5 ‘‘(i) subparagraph (A) shall not apply, 

6 ‘‘(ii) such interest shall be treated as 

7 an investment services partnership interest 

8 in the hands of the person acquiring such 

9 interest, and 

10 ‘‘(iii) any amount that would have 

11 been treated as ordinary income under this 

12 subsection had the decedent sold such in13 terest immediately before death shall be 

14 treated as an item of income in respect of 

15 a decedent under section 691. 

16 ‘‘(2) LOSS.—Any loss on the disposition of an 

17 investment services partnership interest shall be 

18 treated as an ordinary loss to the extent of the ex19 cess (if any) of— 

20 ‘‘(A) the aggregate amount treated as ordi21 nary income under subsection (a) with respect 

22 to such interest for all partnership taxable 

23 years to which this section applies, over 

24 ‘‘(B) the aggregate amount treated as or25 dinary loss under subsection (a) with respect to 


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1 such interest for all partnership taxable years 

2 to which this section applies. 

3 ‘‘(3) ELECTION WITH RESPECT TO CERTAIN EX4 CHANGES.—Paragraph (1)(A)(ii) shall not apply to 

5 the contribution of an investment services partner6 ship interest to a partnership in exchange for an in7 terest in such partnership if— 

8 ‘‘(A) the taxpayer makes an irrevocable 

9 election to treat the partnership interest re10 ceived in the exchange as an investment serv11 ices partnership interest, and 

12 ‘‘(B) the taxpayer agrees to comply with 

13 such reporting and recordkeeping requirements 

14 as the Secretary may prescribe. 

15 ‘‘(4) DISTRIBUTIONS OF PARTNERSHIP PROP16 ERTY.— 

17 ‘‘(A) IN GENERAL.—In the case of any dis18 tribution of property by a partnership with re19 spect to any investment services partnership in20 terest held by a partner, the partner receiving 

21 such property shall recognize gain equal to the 

22 excess (if any) of— 

23 ‘‘(i) the fair market value of such 

24 property at the time of such distribution, 

25 over 


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1 ‘‘(ii) the adjusted basis of such prop2 erty in the hands of such partner (deter3 mined without regard to subparagraph 

4 (C)). 

5 ‘‘(B) TREATMENT OF GAIN AS ORDINARY

6 INCOME.—Any gain recognized by such partner 

7 under subparagraph (A) shall be treated as or8 dinary income to the same extent and in the 

9 same manner as the increase in such partner’s 

10 distributive share of the taxable income of the 

11 partnership would be treated under subsection 

12 (a) if, immediately prior to the distribution, the 

13 partnership had sold the distributed property at 

14 fair market value and all of the gain from such 

15 disposition were allocated to such partner. For 

16 purposes of applying subsection (a)(2), any gain 

17 treated as ordinary income under this subpara18 graph shall be treated as an amount treated as 

19 ordinary income under subsection (a)(1)(A). 

20 ‘‘(C) ADJUSTMENT OF BASIS.—In the case 

21 a distribution to which subparagraph (A) ap22 plies, the basis of the distributed property in 

23 the hands of the distributee partner shall be the 

24 fair market value of such property. 


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1 ‘‘(D) SPECIAL RULES WITH RESPECT TO

2 MERGERS AND DIVISIONS.—In the case of a 

3 taxpayer which satisfies requirements similar to 

4 the requirements of subparagraphs (A) and (B) 

5 of paragraph (3), this paragraph and paragraph 

6 (1)(A)(ii) shall not apply to the distribution of 

7 a partnership interest if such distribution is in 

8 connection with a contribution (or deemed con9 tribution) of any property of the partnership to 

10 which section 721 applies pursuant to a trans11 action described in paragraph (2) of section 

12 708(b). 

13 ‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTER14 EST.—For purposes of this section— 

15 ‘‘(1) IN GENERAL.—The term ‘investment serv16 ices partnership interest’ means any interest in an 

17 investment partnership acquired or held by any per18 son in connection with the conduct of a trade or 

19 business described in paragraph (2) by such person 

20 (or any person related to such person). An interest 

21 in an investment partnership held by any person— 

22 ‘‘(A) shall not be treated as an investment 

23 services partnership interest for any period be24 fore the first date on which it is so held in con25 nection with such a trade or business, 


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1 ‘‘(B) shall not cease to be an investment 

2 services partnership interest merely because 

3 such person holds such interest other than in 

4 connection with such a trade or business, and 

5 ‘‘(C) shall be treated as an investment 

6 services partnership interest if acquired from a 

7 related person in whose hands such interest was 

8 an investment services partnership interest. 

9 ‘‘(2) BUSINESSES TO WHICH THIS SECTION AP10 PLIES.—A trade or business is described in this 

11 paragraph if such trade or business primarily in12 volves the performance of any of the following serv13 ices with respect to assets held (directly or indi14 rectly) by one or more investment partnerships re15 ferred to in paragraph (1): 

16 ‘‘(A) Advising as to the advisability of in17 vesting in, purchasing, or selling any specified 

18 asset. 

19 ‘‘(B) Managing, acquiring, or disposing of 

20 any specified asset. 

21 ‘‘(C) Arranging financing with respect to 

22 acquiring specified assets. 

23 ‘‘(D) Any activity in support of any service 

24 described in subparagraphs (A) through (C). 

25 ‘‘(3) INVESTMENT PARTNERSHIP.— 


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1 ‘‘(A) IN GENERAL.—The term ‘investment 

2 partnership’ means any partnership if, at the 

3 end of any two consecutive calendar quarters 

4 ending after the date of enactment of this sec5 tion— 

6 ‘‘(i) substantially all of the assets of 

7 the partnership are specified assets (deter8 mined without regard to any section 197 

9 intangible within the meaning of section 

10 197(d)), and 

11 ‘‘(ii) less than 75 percent of the cap12 ital of the partnership is attributable to 

13 qualified capital interests which constitute 

14 property held in connection with a trade or 

15 business of the owner of such interest. 

16 ‘‘(B) LOOK-THROUGH OF CERTAIN WHOL17 LY OWNED ENTITIES FOR PURPOSES OF DETER18 MINING ASSETS OF THE PARTNERSHIP.— 

19 ‘‘(i) IN GENERAL.—For purposes of 

20 determining the assets of a partnership 

21 under subparagraph (A)(i)— 

22 ‘‘(I) any interest in a specified 

23 entity shall not be treated as an asset 

24 of such partnership, and 


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1 ‘‘(II) such partnership shall be 

2 treated as holding its proportionate 

3 share of each of the assets of such 

4 specified entity. 

5 ‘‘(ii) SPECIFIED ENTITY.—For pur6 poses of clause (i), the term ‘specified enti7 ty’ means, with respect to any partnership 

8 (hereafter referred to as the upper-tier 

9 partnership), any person which engages in 

10 the same trade or business as the upper11 tier partnership and is— 

12 ‘‘(I) a partnership all of the cap13 ital and profits interests of which are 

14 held directly or indirectly by the 

15 upper-tier partnership, or 

16 ‘‘(II) a foreign corporation which 

17 does not engage in a trade or business 

18 in the United States and all of the 

19 stock of which is held directly or indi20 rectly by the upper-tier partnership. 

21 ‘‘(C) SPECIAL RULES FOR DETERMINING

22 IF PROPERTY HELD IN CONNECTION WITH

23 TRADE OR BUSINESS.— 

24 ‘‘(i) IN GENERAL.—Except as other25 wise provided by the Secretary, solely for 


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1 purposes of determining whether any inter2 est in a partnership constitutes property 

3 held in connection with a trade or business 

4 under subparagraph (A)(ii)— 

5 ‘‘(I) a trade or business of any 

6 person closely related to the owner of 

7 such interest shall be treated as a 

8 trade or business of such owner, 

9 ‘‘(II) such interest shall be treat10 ed as held by a person in connection 

11 with a trade or business during any 

12 taxable year if such interest was so 

13 held by such person during any 3 tax14 able years preceding such taxable 

15 year, and 

16 ‘‘(III) paragraph (5)(B) shall not 

17 apply. 

18 ‘‘(ii) CLOSELY RELATED PERSONS.— 

19 For purposes of clause (i)(I), a person 

20 shall be treated as closely related to an21 other person if, taking into account the 

22 rules of section 267(c), the relationship be23 tween such persons is described in— 

24 ‘‘(I) paragraph (1) or (9) of sec25 tion 267(b), or 


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1 ‘‘(II) section 267(b)(4), but solely 

2 in the case of a trust with respect to 

3 which each current beneficiary is the 

4 grantor or a person whose relationship 

5 to the grantor is described in para6 graph (1) or (9) of section 267(b). 

7 ‘‘(D) ANTIABUSE RULES.—The Secretary 

8 may issue regulations or other guidance which 

9 prevent the avoidance of the purposes of sub10 paragraph (A), including regulations or other 

11 guidance which treat convertible and contingent 

12 debt (and other debt having the attributes of 

13 equity) as a capital interest in the partnership. 

14 ‘‘(E) CONTROLLED GROUPS OF ENTI15 TIES.— 

16 ‘‘(i) IN GENERAL.—In the case of a 

17 controlled group of entities, if an interest 

18 in the partnership received in exchange for 

19 a contribution to the capital of the part20 nership by any member of such controlled 

21 group would (in the hands of such mem22 ber) constitute property held in connection 

23 with a trade or business, then any interest 

24 in such partnership held by any member of 

25 such group shall be treated for purposes of 


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1 subparagraph (A) as constituting (in the 

2 hands of such member) property held in 

3 connection with a trade or business. 

4 ‘‘(ii) CONTROLLED GROUP OF ENTI5 TIES.—For purposes of clause (i), the term 

6 ‘controlled group of entities’ means a con7 trolled group of corporations as defined in 

8 section 1563(a)(1), applied without regard 

9 to subsections (a)(4) and (b)(2) of section 

10 1563. A partnership or any other entity 

11 (other than a corporation) shall be treated 

12 as a member of a controlled group of enti13 ties if such entity is controlled (within the 

14 meaning of section 954(d)(3)) by members 

15 of such group (including any entity treated 

16 as a member of such group by reason of 

17 this sentence). 

18 ‘‘(F) SPECIAL RULE FOR CORPORA19 TIONS.—For purposes of this paragraph, in the 

20 case of a corporation, the determination of 

21 whether property is held in connection with a 

22 trade or business shall be determined as if the 

23 taxpayer were an individual. 

24 ‘‘(4) SPECIFIED ASSET.—The term ‘specified 

25 asset’ means securities (as defined in section 


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1 475(c)(2) without regard to the last sentence there2 of), real estate held for rental or investment, inter3 ests in partnerships, commodities (as defined in sec4 tion 475(e)(2)), cash or cash equivalents, or options 

5 or derivative contracts with respect to any of the 

6 foregoing. 

7 ‘‘(5) RELATED PERSONS.— 

8 ‘‘(A) IN GENERAL.—A person shall be 

9 treated as related to another person if the rela10 tionship between such persons is described in 

11 section 267(b) or 707(b). 

12 ‘‘(B) ATTRIBUTION OF PARTNER SERV13 ICES.—Any service described in paragraph (2) 

14 which is provided by a partner of a partnership 

15 shall be treated as also provided by such part16 nership. 

17 ‘‘(d) EXCEPTION FOR CERTAIN CAPITAL INTER18 ESTS.— 

19 ‘‘(1) IN GENERAL.—In the case of any portion 

20 of an investment services partnership interest which 

21 is a qualified capital interest, all items of gain and 

22 loss (and any dividends) which are allocated to such 

23 qualified capital interest shall not be taken into ac24 count under subsection (a) if— 


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1 ‘‘(A) allocations of items are made by the 

2 partnership to such qualified capital interest in 

3 the same manner as such allocations are made 

4 to other qualified capital interests held by part5 ners who do not provide any services described 

6 in subsection (c)(2) and who are not related to 

7 the partner holding the qualified capital inter8 est, and 

9 ‘‘(B) the allocations made to such other in10 terests are significant compared to the alloca11 tions made to such qualified capital interest. 

12 ‘‘(2) AUTHORITY TO PROVIDE EXCEPTIONS TO

13 ALLOCATION REQUIREMENTS.—To the extent pro14 vided by the Secretary in regulations or other guid15 ance— 

16 ‘‘(A) ALLOCATIONS TO PORTION OF QUALI17 FIED CAPITAL INTEREST.—Paragraph (1) may 

18 be applied separately with respect to a portion 

19 of a qualified capital interest. 

20 ‘‘(B) NO OR INSIGNIFICANT ALLOCATIONS

21 TO NONSERVICE PROVIDERS.—In any case in 

22 which the requirements of paragraph (1)(B) are 

23 not satisfied, items of gain and loss (and any 

24 dividends) shall not be taken into account under 

25 subsection (a) to the extent that such items are 


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1 properly allocable under such regulations or 

2 other guidance to qualified capital interests. 

3 ‘‘(C) ALLOCATIONS TO SERVICE PRO4 VIDERS’ QUALIFIED CAPITAL INTERESTS WHICH

5 ARE LESS THAN OTHER ALLOCATIONS.—Alloca6 tions shall not be treated as failing to meet the 

7 requirement of paragraph (1)(A) merely be8 cause the allocations to the qualified capital in9 terest represent a lower return than the alloca10 tions made to the other qualified capital inter11 ests referred to in such paragraph. 

12 ‘‘(3) SPECIAL RULE FOR CHANGES IN SERVICES

13 AND CAPITAL CONTRIBUTIONS.—In the case of an 

14 interest in a partnership which was not an invest15 ment services partnership interest and which, by 

16 reason of a change in the services with respect to as17 sets held (directly or indirectly) by the partnership 

18 or by reason of a change in the capital contributions 

19 to such partnership, becomes an investment services 

20 partnership interest, the qualified capital interest of 

21 the holder of such partnership interest immediately 

22 after such change shall not, for purposes of this sub23 section, be less than the fair market value of such 

24 interest (determined immediately before such 

25 change). 


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1 ‘‘(4) SPECIAL RULE FOR TIERED PARTNER2 SHIPS.—Except as otherwise provided by the Sec3 retary, in the case of tiered partnerships, all items 

4 which are allocated in a manner which meets the re5 quirements of paragraph (1) to qualified capital in6 terests in a lower-tier partnership shall retain such 

7 character to the extent allocated on the basis of 

8 qualified capital interests in any upper-tier partner9 ship. 

10 ‘‘(5) EXCEPTION FOR NO-SELF-CHARGED

11 CARRY AND MANAGEMENT FEE PROVISIONS.—Ex12 cept as otherwise provided by the Secretary, an in13 terest shall not fail to be treated as satisfying the 

14 requirement of paragraph (1)(A) merely because the 

15 allocations made by the partnership to such interest 

16 do not reflect the cost of services described in sub17 section (c)(2) which are provided (directly or indi18 rectly) to the partnership by the holder of such in19 terest (or a related person). 

20 ‘‘(6) SPECIAL RULE FOR DISPOSITIONS.—In the 

21 case of any investment services partnership interest 

22 any portion of which is a qualified capital interest, 

23 subsection (b) shall not apply to so much of any 

24 gain or loss as bears the same proportion to the en25 tire amount of such gain or loss as— 


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1 ‘‘(A) the distributive share of gain or loss 

2 that would have been allocated to the qualified 

3 capital interest (consistent with the require4 ments of paragraph (1)) if the partnership had 

5 sold all of its assets at fair market value imme6 diately before the disposition, bears to 

7 ‘‘(B) the distributive share of gain or loss 

8 that would have been so allocated to the invest9 ment services partnership interest of which such 

10 qualified capital interest is a part. 

11 ‘‘(7) QUALIFIED CAPITAL INTEREST.—For pur12 poses of this section— 

13 ‘‘(A) IN GENERAL.—The term ‘qualified 

14 capital interest’ means so much of a partner’s 

15 interest in the capital of the partnership as is 

16 attributable to— 

17 ‘‘(i) the fair market value of any 

18 money or other property contributed to the 

19 partnership in exchange for such interest 

20 (determined without regard to section 

21 752(a)), 

22 ‘‘(ii) any amounts which have been in23 cluded in gross income under section 83 

24 with respect to the transfer of such inter25 est, and 


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1 ‘‘(iii) the excess (if any) of— 

2 ‘‘(I) any items of income and 

3 gain taken into account under section 

4 702 with respect to such interest, over 

5 ‘‘(II) any items of deduction and 

6 loss so taken into account. 

7 ‘‘(B) ADJUSTMENT TO QUALIFIED CAPITAL

8 INTEREST.— 

9 ‘‘(i) DISTRIBUTIONS AND LOSSES.— 

10 The qualified capital interest shall be re11 duced by distributions from the partner12 ship with respect to such interest and by 

13 the excess (if any) of the amount described 

14 in subparagraph (A)(iii)(II) over the 

15 amount described in subparagraph 

16 (A)(iii)(I). 

17 ‘‘(ii) SPECIAL RULE FOR CONTRIBU18 TIONS OF PROPERTY.—In the case of any 

19 contribution of property described in sub20 paragraph (A)(i) with respect to which the 

21 fair market value of such property is not 

22 equal to the adjusted basis of such prop23 erty immediately before such contribution, 

24 proper adjustments shall be made to the 

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1 count such difference consistent with such 

2 regulations or other guidance as the Sec3 retary may provide. 

4 ‘‘(C) MERGER, CONSOLIDATION, DIVISION, 

5 ETC., DISREGARDED.—No increase or decrease 

6 in the qualified capital interest of any partner 

7 shall result from a merger, consolidation, or di8 vision described in section 708, or any similar 

9 transaction. 

10 ‘‘(8) TREATMENT OF CERTAIN LOANS.— 

11 ‘‘(A) PROCEEDS OF PARTNERSHIP LOANS

12 NOT TREATED AS QUALIFIED CAPITAL INTER13 EST OF SERVICE PROVIDING PARTNERS.—For 

14 purposes of this subsection, an investment serv15 ices partnership interest shall not be treated as 

16 a qualified capital interest to the extent that 

17 such interest is acquired in connection with the 

18 proceeds of any loan or other advance made or 

19 guaranteed, directly or indirectly, by any other 

20 partner or the partnership (or any person re21 lated to any such other partner or the partner22 ship). The preceding sentence shall not apply to 

23 the extent the loan or other advance is repaid 

24 before the date of the enactment of this section 

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1 ceeds of a loan or other advance described in 

2 the preceding sentence. 

3 ‘‘(B) REDUCTION IN ALLOCATIONS TO

4 QUALIFIED CAPITAL INTERESTS FOR LOANS

5 FROM NONSERVICE-PROVIDING PARTNERS TO

6 THE PARTNERSHIP.—For purposes of this sub7 section, any loan or other advance to the part8 nership made or guaranteed, directly or indi9 rectly, by a partner not providing services de10 scribed in subsection (c)(2) to the partnership 

11 (or any person related to such partner) shall be 

12 taken into account in determining the qualified 

13 capital interests of the partners in the partner14 ship. 

15 ‘‘(9) SPECIAL RULE FOR QUALIFIED FAMILY

16 PARTNERSHIPS.— 

17 ‘‘(A) IN GENERAL.—In the case of any 

18 specified family partnership interest, paragraph 

19 (1)(A) shall be applied without regard to the 

20 phrase ‘and who are not related to the partner 

21 holding the qualified capital interest’. 

22 ‘‘(B) SPECIFIED FAMILY PARTNERSHIP IN23 TEREST.—For purposes of this paragraph, the 

24 term ‘specified family partnership interest’ 


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1 means any investment services partnership in2 terest if— 

3 ‘‘(i) such interest is an interest in a 

4 qualified family partnership, 

5 ‘‘(ii) such interest is held by a natural 

6 person or by a trust with respect to which 

7 each beneficiary is a grantor or a person 

8 whose relationship to the grantor is de9 scribed in section 267(b)(1), and 

10 ‘‘(iii) all other interests in such quali11 fied family partnership with respect to 

12 which significant allocations are made 

13 (within the meaning of paragraph (1)(B) 

14 and in comparison to the allocations made 

15 to the interest described in clause (ii)) are 

16 held by persons who— 

17 ‘‘(I) are related to the natural 

18 person or trust referred to in clause 

19 (ii), or 

20 ‘‘(II) provide services described 

21 in subsection (c)(2). 

22 ‘‘(C) QUALIFIED FAMILY PARTNERSHIP.— 

23 For purposes of this paragraph, the term 

24 ‘qualified family partnership’ means any part25 nership if— 


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1 ‘‘(i) all of the capital and profits in2 terests of such partnership are held by— 

3 ‘‘(I) specified family members, 

4 ‘‘(II) any person closely related 

5 (within the meaning of subsection 

6 (c)(3)(C)(ii)) to a specified family 

7 member, or 

8 ‘‘(III) any other person (not de9 scribed in subclause (I) or (II)) if 

10 such interest is an investment services 

11 partnership interest with respect to 

12 such person, and 

13 ‘‘(ii) such partnership does not hold 

14 itself out to the public as an investment 

15 advisor. 

16 ‘‘(D) SPECIFIED FAMILY MEMBERS.—For 

17 purposes of subparagraph (C), individuals shall 

18 be treated as specified family members if such 

19 individuals would be treated as one person 

20 under the rules of section 1361(c)(1) if the ap21 plicable date (within the meaning of subpara22 graph (B)(iii) thereof) were the latest of— 

23 ‘‘(i) the date of the establishment of 

24 the partnership, 


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1 ‘‘(ii) the earliest date that the com2 mon ancestor holds a capital or profits in3 terest in the partnership, or 

4 ‘‘(iii) the date of the enactment of this 

5 section. 

6 ‘‘(e) OTHER INCOME AND GAIN IN CONNECTION

7 WITH INVESTMENT MANAGEMENT SERVICES.— 

8 ‘‘(1) IN GENERAL.—If— 

9 ‘‘(A) a person performs (directly or indi10 rectly) investment management services for any 

11 investment entity, 

12 ‘‘(B) such person holds (directly or indi13 rectly) a disqualified interest with respect to 

14 such entity, and 

15 ‘‘(C) the value of such interest (or pay16 ments thereunder) is substantially related to 

17 the amount of income or gain (whether or not 

18 realized) from the assets with respect to which 

19 the investment management services are per20 formed, 

21 any income or gain with respect to such interest 

22 shall be treated as ordinary income. Rules similar to 

23 the rules of subsections (a)(5) and (d) shall apply 

24 for purposes of this subsection. 


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1 ‘‘(2) DEFINITIONS.—For purposes of this sub2 section— 

3 ‘‘(A) DISQUALIFIED INTEREST.— 

4 ‘‘(i) IN GENERAL.—The term ‘dis5 qualified interest’ means, with respect to 

6 any investment entity— 

7 ‘‘(I) any interest in such entity 

8 other than indebtedness, 

9 ‘‘(II) convertible or contingent 

10 debt of such entity, 

11 ‘‘(III) any option or other right 

12 to acquire property described in sub13 clause (I) or (II), and 

14 ‘‘(IV) any derivative instrument 

15 entered into (directly or indirectly) 

16 with such entity or any investor in 

17 such entity. 

18 ‘‘(ii) EXCEPTIONS.—Such term shall 

19 not include— 

20 ‘‘(I) a partnership interest, 

21 ‘‘(II) except as provided by the 

22 Secretary, any interest in a taxable 

23 corporation, and 

24 ‘‘(III) except as provided by the 

25 Secretary, stock in an S corporation. 


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1 ‘‘(B) TAXABLE CORPORATION.—The term 

2 ‘taxable corporation’ means— 

3 ‘‘(i) a domestic C corporation, or 

4 ‘‘(ii) a foreign corporation substan5 tially all of the income of which is— 

6 ‘‘(I) effectively connected with 

7 the conduct of a trade or business in 

8 the United States, or 

9 ‘‘(II) subject to a comprehensive 

10 foreign income tax (as defined in sec11 tion 457A(d)(2)). 

12 ‘‘(C) INVESTMENT MANAGEMENT SERV13 ICES.—The term ‘investment management serv14 ices’ means a substantial quantity of any of the 

15 services described in subsection (c)(2). 

16 ‘‘(D) INVESTMENT ENTITY.—The term ‘in17 vestment entity’ means any entity which, if it 

18 were a partnership, would be an investment 

19 partnership. 

20 ‘‘(f) EXCEPTION FOR DOMESTIC C CORPORATIONS.— 

21 Except as otherwise provided by the Secretary, in the case 

22 of a domestic C corporation— 

23 ‘‘(1) subsections (a) and (b) shall not apply to 

24 any item allocated to such corporation with respect 

25 to any investment services partnership interest (or 


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1 to any gain or loss with respect to the disposition of 

2 such an interest), and 

3 ‘‘(2) subsection (e) shall not apply. 

4 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

5 such regulations or other guidance as is necessary or ap6 propriate to carry out the purposes of this section, includ7 ing regulations or other guidance to— 

8 ‘‘(1) require such reporting and recordkeeping 

9 by any person in such manner and at such time as 

10 the Secretary may prescribe for purposes of enabling 

11 the partnership to meet the requirements of section 

12 6031 with respect to any item described in section 

13 702(a)(9), 

14 ‘‘(2) provide modifications to the application of 

15 this section (including treating related persons as 

16 not related to one another) to the extent such modi17 fication is consistent with the purposes of this sec18 tion, 

19 ‘‘(3) prevent the avoidance of the purposes of 

20 this section (including through the use of qualified 

21 family partnerships), and 

22 ‘‘(4) coordinate this section with the other pro23 visions of this title. 


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1 ‘‘(h) CROSS REFERENCE.—For 40-percent penalty 

2 on certain underpayments due to the avoidance of this sec3 tion, see section 6662.’’. 

4 (b) APPLICATION OF SECTION 751 TO INDIRECT DIS5 POSITIONS OF INVESTMENT SERVICES PARTNERSHIP IN6 TERESTS.— 

7 (1) IN GENERAL.—Subsection (a) of section 

8 751 of such Code is amended by striking ‘‘or’’ at the 

9 end of paragraph (1), by inserting ‘‘or’’ at the end 

10 of paragraph (2), and by inserting after paragraph 

11 (2) the following new paragraph: 

12 ‘‘(3) investment services partnership interests 

13 held by the partnership,’’. 

14 (2) CERTAIN DISTRIBUTIONS TREATED AS

15 SALES OR EXCHANGES.—Subparagraph (A) of sec16 tion 751(b)(1) of such Code is amended by striking 

17 ‘‘or’’ at the end of clause (i), by inserting ‘‘or’’ at 

18 the end of clause (ii), and by inserting after clause 

19 (ii) the following new clause: 

20 ‘‘(iii) investment services partnership 

21 interests held by the partnership,’’. 

22 (3) APPLICATION OF SPECIAL RULES IN THE

23 CASE OF TIERED PARTNERSHIPS.—Subsection (f) of 

24 section 751 of such Code is amended— 


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1 (A) by striking ‘‘or’’ at the end of para2 graph (1), by inserting ‘‘or’’ at the end of para3 graph (2), and by inserting after paragraph (2) 

4 the following new paragraph: 

5 ‘‘(3) an investment services partnership interest 

6 held by the partnership,’’, and 

7 (B) by striking ‘‘partner.’’ and inserting 

8 ‘‘partner (other than a partnership in which it 

9 holds an investment services partnership inter10 est).’’. 

11 (4) INVESTMENT SERVICES PARTNERSHIP IN12 TERESTS; QUALIFIED CAPITAL INTERESTS.—Section 

13 751 of such Code is amended by adding at the end 

14 the following new subsection: 

15 ‘‘(g) INVESTMENT SERVICES PARTNERSHIP INTER16 ESTS.—For purposes of this section— 

17 ‘‘(1) IN GENERAL.—The term ‘investment serv18 ices partnership interest’ has the meaning given 

19 such term by section 710(c). 

20 ‘‘(2) ADJUSTMENTS FOR QUALIFIED CAPITAL

21 INTERESTS.—The amount to which subsection (a) 

22 applies by reason of paragraph (3) thereof shall not 

23 include so much of such amount as is attributable 

24 to any portion of the investment services partnership 

25 interest which is a qualified capital interest (deterVerDate Sep 11 2014 03:11 Feb 26, 2022 Jkt 029200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\H6763.IH H6763

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1 mined under rules similar to the rules of section 

2 710(d)). 

3 ‘‘(3) EXCEPTION FOR PUBLICLY TRADED PART4 NERSHIPS.—Except as otherwise provided by the 

5 Secretary, in the case of an exchange of an interest 

6 in a publicly traded partnership (as defined in sec7 tion 7704) to which subsection (a) applies— 

8 ‘‘(A) this section shall be applied without 

9 regard to subsections (a)(3), (b)(1)(A)(iii), and 

10 (f)(3), and 

11 ‘‘(B) such partnership shall be treated as 

12 owning its proportionate share of the property 

13 of any other partnership in which it is a part14 ner. 

15 ‘‘(4) RECOGNITION OF GAINS.—Any gain with 

16 respect to which subsection (a) applies by reason of 

17 paragraph (3) thereof shall be recognized notwith18 standing any other provision of this title. 

19 ‘‘(5) COORDINATION WITH INVENTORY

20 ITEMS.—An investment services partnership interest 

21 held by the partnership shall not be treated as an 

22 inventory item of the partnership. 

23 ‘‘(6) PREVENTION OF DOUBLE COUNTING.— 

24 Under regulations or other guidance prescribed by 


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1 the Secretary, subsection (a)(3) shall not apply with 

2 respect to any amount to which section 710 applies. 

3 ‘‘(7) VALUATION METHODS.—The Secretary 

4 shall prescribe regulations or other guidance which 

5 provide the acceptable methods for valuing invest6 ment services partnership interests for purposes of 

7 this section.’’. 

8 (c) TREATMENT FOR PURPOSES OF SECTION

9 7704.—Subsection (d) of section 7704 of such Code is 

10 amended by adding at the end the following new para11 graph: 

12 ‘‘(6) INCOME FROM CERTAIN CARRIED INTER13 ESTS NOT QUALIFIED.— 

14 ‘‘(A) IN GENERAL.—Specified carried in15 terest income shall not be treated as qualifying 

16 income. 

17 ‘‘(B) SPECIFIED CARRIED INTEREST IN18 COME.—For purposes of this paragraph— 

19 ‘‘(i) IN GENERAL.—The term ‘speci20 fied carried interest income’ means— 

21 ‘‘(I) any item of income or gain 

22 allocated to an investment services 

23 partnership interest (as defined in 

24 section 710(c)) held by the partner25 ship, 


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1 ‘‘(II) any gain on the disposition 

2 of an investment services partnership 

3 interest (as so defined) or a partner4 ship interest to which (in the hands of 

5 the partnership) section 751 applies, 

6 and 

7 ‘‘(III) any income or gain taken 

8 into account by the partnership under 

9 subsection (b)(4) or (e) of section 

10 710. 

11 ‘‘(ii) EXCEPTION FOR QUALIFIED CAP12 ITAL INTERESTS.—A rule similar to the 

13 rule of section 710(d) shall apply for pur14 poses of clause (i). 

15 ‘‘(C) COORDINATION WITH OTHER PROVI16 SIONS.—Subparagraph (A) shall not apply to 

17 any item described in paragraph (1)(E) (or so 

18 much of paragraph (1)(F) as relates to para19 graph (1)(E)). 

20 ‘‘(D) SPECIAL RULES FOR CERTAIN PART21 NERSHIPS.— 

22 ‘‘(i) CERTAIN PARTNERSHIPS OWNED

23 BY REAL ESTATE INVESTMENT TRUSTS.— 

24 Subparagraph (A) shall not apply in the 


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1 case of a partnership which meets each of 

2 the following requirements: 

3 ‘‘(I) Such partnership is treated 

4 as publicly traded under this section 

5 solely by reason of interests in such 

6 partnership being convertible into in7 terests in a real estate investment 

8 trust which is publicly traded. 

9 ‘‘(II) Fifty percent or more of 

10 the capital and profits interests of 

11 such partnership are owned, directly 

12 or indirectly, at all times during the 

13 taxable year by such real estate in14 vestment trust (determined with the 

15 application of section 267(c)). 

16 ‘‘(III) Such partnership meets 

17 the requirements of paragraphs (2), 

18 (3), and (4) of section 856(c). 

19 ‘‘(ii) CERTAIN PARTNERSHIPS OWN20 ING OTHER PUBLICLY TRADED PARTNER21 SHIPS.—Subparagraph (A) shall not apply 

22 in the case of a partnership which meets 

23 each of the following requirements: 

24 ‘‘(I) Substantially all of the as25 sets of such partnership consist of inVerDate Sep 11 2014 03:11 Feb 26, 2022 Jkt 029200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\H6763.IH H6763

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1 terests in one or more publicly traded 

2 partnerships (determined without re3 gard to subsection (b)(2)). 

4 ‘‘(II) Substantially all of the in5 come of such partnership is ordinary 

6 income or section 1231 gain (as de7 fined in section 1231(a)(3)). 

8 ‘‘(E) TRANSITIONAL RULE.—Subpara9 graph (A) shall not apply to any taxable year 

10 of the partnership beginning before the date 

11 which is 10 years after the date of the enact12 ment of this paragraph.’’. 

13 (d) IMPOSITION OF PENALTY ON UNDERPAY14 MENTS.— 

15 (1) IN GENERAL.—Subsection (b) of section 

16 6662 of such Code is amended by inserting after 

17 paragraph (7) the following new paragraph: 

18 ‘‘(8) The application of section 710(e) or the 

19 regulations or other guidance prescribed under sec20 tion 710(g) to prevent the avoidance of the purposes 

21 of section 710.’’. 

22 (2) AMOUNT OF PENALTY.— 

23 (A) IN GENERAL.—Section 6662 of such 

24 Code is amended by adding at the end the fol25 lowing new subsection: 


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1 ‘‘(k) INCREASE IN PENALTY IN CASE OF PROPERTY

2 TRANSFERRED FOR INVESTMENT MANAGEMENT SERV3 ICES.—In the case of any portion of an underpayment to 

4 which this section applies by reason of subsection (b)(8), 

5 subsection (a) shall be applied with respect to such portion 

6 by substituting ‘40 percent’ for ‘20 percent’.’’. 

7 (B) CONFORMING AMENDMENT.—Subpara8 graph (B) of section 6662A(e)(2) of such Code 

9 is amended by striking ‘‘or (i)’’ and inserting ‘‘, 

10 (i), or (k)’’. 

11 (3) SPECIAL RULES FOR APPLICATION OF REA12 SONABLE CAUSE EXCEPTION.—Subsection (c) of sec13 tion 6664 of such Code is amended— 

14 (A) by redesignating paragraphs (3) and 

15 (4) as paragraphs (4) and (5), respectively, 

16 (B) by striking ‘‘paragraph (3)’’ in para17 graph (5)(A), as so redesignated, and inserting 

18 ‘‘paragraph (4)’’, and 

19 (C) by inserting after paragraph (2) the 

20 following new paragraph: 

21 ‘‘(3) SPECIAL RULE FOR UNDERPAYMENTS AT22 TRIBUTABLE TO INVESTMENT MANAGEMENT SERV23 ICES.— 

24 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

25 not apply to any portion of an underpayment to 


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1 which section 6662 applies by reason of sub2 section (b)(8) unless— 

3 ‘‘(i) the relevant facts affecting the 

4 tax treatment of the item are adequately 

5 disclosed, 

6 ‘‘(ii) there is or was substantial au7 thority for such treatment, and 

8 ‘‘(iii) the taxpayer reasonably believed 

9 that such treatment was more likely than 

10 not the proper treatment. 

11 ‘‘(B) RULES RELATING TO REASONABLE

12 BELIEF.—Rules similar to the rules of sub13 section (d)(3) shall apply for purposes of sub14 paragraph (A)(iii).’’. 

15 (e) INCOME AND LOSS FROM INVESTMENT SERVICES

16 PARTNERSHIP INTERESTS TAKEN INTO ACCOUNT IN DE17 TERMINING NET EARNINGS FROM SELF-EMPLOYMENT.— 

18 (1) INTERNAL REVENUE CODE.— 

19 (A) IN GENERAL.—Section 1402(a) of 

20 such Code is amended by striking ‘‘and’’ at the 

21 end of paragraph (16), by striking the period at 

22 the end of paragraph (17) and inserting ‘‘; 

23 and’’, and by inserting after paragraph (17) the 

24 following new paragraph: 


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1 ‘‘(18) notwithstanding the preceding provisions 

2 of this subsection, in the case of any individual en3 gaged in the trade or business of providing services 

4 described in section 710(c)(2) with respect to any 

5 entity, investment services partnership income or 

6 loss (as defined in subsection (m)) of such individual 

7 with respect to such entity shall be taken into ac8 count in determining the net earnings from self-em9 ployment of such individual.’’. 

10 (B) INVESTMENT SERVICES PARTNERSHIP

11 INCOME OR LOSS.—Section 1402 of such Code 

12 is amended by adding at the end the following 

13 new subsection: 

14 ‘‘(m) INVESTMENT SERVICES PARTNERSHIP INCOME

15 OR LOSS.—For purposes of subsection (a)— 

16 ‘‘(1) IN GENERAL.—The term ‘investment serv17 ices partnership income or loss’ means, with respect 

18 to any investment services partnership interest (as 

19 defined in section 710(c)) or disqualified interest (as 

20 defined in section 710(e)), the net of— 

21 ‘‘(A) the amounts treated as ordinary in22 come or ordinary loss under subsections (b) and 

23 (e) of section 710 with respect to such interest, 

24 ‘‘(B) all items of income, gain, loss, and 

25 deduction allocated to such interest, and 


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1 ‘‘(C) the amounts treated as realized from 

2 the sale or exchange of property other than a 

3 capital asset under section 751 with respect to 

4 such interest. 

5 ‘‘(2) EXCEPTION FOR QUALIFIED CAPITAL IN6 TERESTS.—A rule similar to the rule of section 

7 710(d) shall apply for purposes of applying para8 graph (1)(B).’’. 

9 (2) SOCIAL SECURITY ACT.—Section 211(a) of 

10 the Social Security Act is amended by striking 

11 ‘‘and’’ at the end of paragraph (15), by striking the 

12 period at the end of paragraph (16) and inserting ‘‘; 

13 and’’, and by inserting after paragraph (16) the fol14 lowing new paragraph: 

15 ‘‘(17) Notwithstanding the preceding provisions 

16 of this subsection, in the case of any individual en17 gaged in the trade or business of providing services 

18 described in section 710(c)(2) of the Internal Rev19 enue Code of 1986 with respect to any entity, invest20 ment services partnership income or loss (as defined 

21 in section 1402(m) of such Code) shall be taken into 

22 account in determining the net earnings from self23 employment of such individual.’’. 

24 (f) SEPARATE ACCOUNTING BY PARTNER.—Section 

25 702(a) of the Internal Revenue Code of 1986 is amended 


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1 by striking ‘‘and’’ at the end of paragraph (7), by striking 

2 the period at the end of paragraph (8) and inserting ‘‘, 

3 and’’, and by inserting after paragraph (8) the following: 

4 ‘‘(9) any amount treated as ordinary income or 

5 loss under subsection (a), (b), or (e) of section 

6 710.’’. 

7 (g) CONFORMING AMENDMENTS.— 

8 (1) Subsection (d) of section 731 of such Code 

9 is amended by inserting ‘‘section 710(b)(4) (relating 

10 to distributions of partnership property),’’ after ‘‘to 

11 the extent otherwise provided by’’. 

12 (2) Section 741 of such Code is amended by in13 serting ‘‘or section 710 (relating to special rules for 

14 partners providing investment management services 

15 to partnerships)’’ before the period at the end. 

16 (3) The table of sections for part I of sub17 chapter K of chapter 1 of such Code is amended by 

18 adding at the end the following new item: 

‘‘Sec. 710. Special rules for partners providing investment management services 

to partnerships.’’. 

19 (4) Part IV of subchapter O of chapter 1 of 

20 such Code is amended by striking section 1061, and 

21 the table of sections for such part is amended by 

22 striking the item relating to section 1061. 

23 (h) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the amendments made by 

3 this section shall apply to taxable years ending after 

4 the date of the enactment of this Act. 

5 (2) PARTNERSHIP TAXABLE YEARS WHICH IN6 CLUDE EFFECTIVE DATE.—In applying section 

7 710(a) of the Internal Revenue Code of 1986 (as 

8 added by this section) in the case of any partnership 

9 taxable year which includes the date of the enact10 ment of this Act, the amount of the net capital gain 

11 referred to in such section shall be treated as being 

12 the lesser of the net capital gain for the entire part13 nership taxable year or the net capital gain deter14 mined by only taking into account items attributable 

15 to the portion of the partnership taxable year which 

16 is after such date. 

17 (3) DISPOSITIONS OF PARTNERSHIP INTER18 ESTS.— 

19 (A) IN GENERAL.—Section 710(b) of such 

20 Code (as added by this section) shall apply to 

21 dispositions and distributions after the date of 

22 the enactment of this Act. 

23 (B) INDIRECT DISPOSITIONS.—The amend24 ments made by subsection (b) shall apply to 


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1 transactions after the date of the enactment of 

2 this Act. 

3 (4) OTHER INCOME AND GAIN IN CONNECTION

4 WITH INVESTMENT MANAGEMENT SERVICES.—Sec5 tion 710(e) of such Code (as added by this section) 

6 shall take effect on the date of the enactment of this 

7 Act. 

Æ 


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