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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1624 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                S. 1624

    To amend the Internal Revenue Code of 1986 to provide that the 
    exception from the treatment of publicly traded partnerships as 
corporations for partnerships with passive-type income shall not apply 
 to partnerships directly or indirectly deriving income from providing 
       investment adviser and related asset management services.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2007

  Mr. Baucus (for himself and Mr. Grassley) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
    To amend the Internal Revenue Code of 1986 to provide that the 
    exception from the treatment of publicly traded partnerships as 
corporations for partnerships with passive-type income shall not apply 
 to partnerships directly or indirectly deriving income from providing 
       investment adviser and related asset management services.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. EXCEPTION FROM TREATMENT OF PUBLICLY TRADED PARTNERSHIPS AS 
              CORPORATIONS NOT TO APPLY TO PARTNERSHIPS DIRECTLY OR 
              INDIRECTLY DERIVING INCOME FROM PROVIDING INVESTMENT 
              ADVISER AND RELATED ASSET MANAGEMENT SERVICES.

    (a) In General.--Section 7704(c) of the Internal Revenue Code of 
1986 (relating to exception for partnerships with passive-type income) 
is amended by adding at the end the following new paragraph:
            ``(4) Exception not to apply to partnerships providing 
        certain investment adviser and related asset management 
        services.--This subsection shall not apply to any partnership 
        which directly or indirectly has any item of income or gain 
        (including capital gains or dividends), the rights to which are 
        derived from--
                    ``(A) services provided by any person as an 
                investment adviser (as defined in section 202(a)(11) of 
                the Investment Advisers Act of 1940, 15 U.S.C. 80b-
                2(a)(11)) or as a person associated with an investment 
                adviser (as defined in section 202(a)(17) of the 
                Investment Advisers Act of 1940, 15 U.S.C. 80b-
                2(a)(17)), or
                    ``(B) asset management services provided by any 
                person described in subparagraph (A) (or any related 
                person) in connection with the management of assets 
                with respect to which services described in 
                subparagraph (A) were provided.
        For purposes of subparagraph (A), the determination as to 
        whether services provided by any person were provided as an 
        investment adviser shall be made without regard to whether the 
        person is required to register as an investment adviser under 
        the Investment Advisers Act of 1940.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall apply to taxable years of 
        a partnership beginning on or after June 14, 2007.
            (2) Transition rule for certain partnerships.--In the case 
        of a partnership--
                    (A) the interests in which on June 14, 2007, were--
                            (i) traded on an established securities 
                        market, or
                            (ii) readily tradeable on a secondary 
                        market (or the substantial equivalent thereof), 
                        or
                    (B) which, on or before June 14, 2007, filed a 
                registration statement with the Securities and Exchange 
                Commission under section 6 of the Securities Act of 
                1933 (15 U.S.C. 77f) which was required solely by 
                reason of an initial public offering of interests in 
                the partnership,
        the amendment made by this section shall apply to taxable years 
        of the partnership beginning on or after June 14, 2012. 
        Subparagraph (B) shall not apply to a registration statement 
        which is filed with respect to securities which are to be 
        issued on a delayed or continuous basis (as determined under 
        the rules of the Securities and Exchange Commission promulgated 
        under such Act).
                                 <all>
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