to the portion of the partnership taxable year which 
is after such date. 
(3) DISPOSITIONS
OF
PARTNERSHIP
INTER-
ESTS.—Section 710(b) of the Internal Revenue Code 
of 1986 (as added by this section) shall apply to dis-
positions and distributions after June 18, 2008. 
(4) OTHER INCOME AND GAIN IN CONNECTION 
WITH INVESTMENT MANAGEMENT SERVICES.—Section 
710(d) of such Code (as added by this section) shall 
take effect on June 18, 2008. 
(5) PUBLICLY
TRADED
PARTNERSHIPS.—For 
purposes of applying section 7704, the amendments 
made by this section shall apply to taxable years be-
ginning after December 31, 2010. 
SEC. 202. LIMITATION OF DEDUCTION FOR INCOME ATTRIB-
UTABLE TO DOMESTIC PRODUCTION OF OIL, 
GAS, OR PRIMARY PRODUCTS THEREOF. 
(a) DENIAL OF DEDUCTION FOR MAJOR INTEGRATED 
OIL COMPANIES FOR INCOME ATTRIBUTABLE TO DOMESTIC 
PRODUCTION
OF
OIL, GAS, OR
PRIMARY
PRODUCTS 
THEREOF.— 
(1) IN GENERAL.—Subparagraph (B) of section 
199(c)(4) (relating to exceptions) is amended by strik-
ing ‘‘or’’ at the end of clause (ii), by striking the pe-
riod at the end of clause (iii) and inserting ‘‘, or’’, 
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and by inserting after clause (iii) the following new 
clause: 
‘‘(iv) in the case of any major inte-
grated oil company (as defined in section 
167(h)(5)(B)), the production, refining, 
processing, transportation, or distribution 
of oil, gas, or any primary product thereof 
during any taxable year described in sec-
tion 167(h)(5)(B).’’. 
(2) PRIMARY PRODUCT.—Section 199(c)(4)(B) is 
amended by adding at the end the following flush sen-
tence: 
‘‘For purposes of clause (iv), the term ‘primary 
product’ has the same meaning as when used in 
section 927(a)(2)(C), as in effect before its re-
peal.’’. 
(b) LIMITATION ON OIL RELATED QUALIFIED PRO-
DUCTION ACTIVITIES INCOME
FOR TAXPAYERS OTHER 
THAN MAJOR INTEGRATED OIL COMPANIES.— 
(1) IN GENERAL.—Section 199(d) is amended by 
redesignating paragraph (9) as paragraph (10) and 
by inserting after paragraph (8) the following new 
paragraph: 
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‘‘(9) SPECIAL RULE FOR TAXPAYERS WITH OIL 
RELATED
QUALIFIED
PRODUCTION
ACTIVITIES
IN-
COME.— 
‘‘(A) IN
GENERAL.—If a taxpayer (other 
than a major integrated oil company (as defined 
in section 167(h)(5)(B))) has oil related qualified 
production activities income for any taxable 
year beginning after 2009, the amount of the de-
duction under subsection (a) shall be reduced by 
3 percent of the least of— 
‘‘(i) the oil related qualified production 
activities income of the taxpayer for the 
taxable year, 
‘‘(ii) the qualified production activities 
income of the taxpayer for the taxable year, 
or 
‘‘(iii) taxable income (determined with-
out regard to this section). 
‘‘(B) OIL RELATED QUALIFIED PRODUCTION 
ACTIVITIES
INCOME.—The term ‘oil related 
qualified production activities income’ means for 
any taxable year the qualified production activi-
ties income which is attributable to the produc-
tion, refining, processing, transportation, or dis-
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tribution of oil, gas, or any primary product 
thereof during such taxable year.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
199(d)(2) (relating to application to individuals) is 
amended by striking ‘‘subsection (a)(1)(B)’’ and in-
serting ‘‘subsections (a)(1)(B) and (d)(9)(A)(iii)’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2008. 
SEC. 203. LIMITATION ON TREATY BENEFITS FOR CERTAIN 
DEDUCTIBLE PAYMENTS. 
(a) IN GENERAL.—Section 894 (relating to income af-
fected by treaty) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) LIMITATION ON TREATY BENEFITS FOR CERTAIN 
DEDUCTIBLE PAYMENTS.— 
‘‘(1) IN GENERAL.—In the case of any deductible 
related-party payment, any withholding tax imposed 
under chapter 3 (and any tax imposed under subpart 
A or B of this part) with respect to such payment 
may not be reduced under any treaty of the United 
States unless any such withholding tax would be re-
duced under a treaty of the United States if such 
payment were made directly to the foreign parent cor-
poration. 
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‘‘(2) DEDUCTIBLE RELATED-PARTY PAYMENT.— 
For purposes of this subsection, the term ‘deductible 
related-party payment’ means any payment made, 
directly or indirectly, by any person to any other per-
son if the payment is allowable as a deduction under 
this chapter and both persons are members of the 
same foreign controlled group of entities. 
‘‘(3) FOREIGN
CONTROLLED
GROUP
OF
ENTI-
TIES.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘foreign con-
trolled group of entities’ means a controlled 
group of entities the common parent of which is 
a foreign corporation. 
‘‘(B) CONTROLLED GROUP OF ENTITIES.— 
The term ‘controlled group of entities’ means a 
controlled group of corporations as defined in 
section 1563(a)(1), except that— 
‘‘(i) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears therein, and 
‘‘(ii) the determination shall be made 
without regard to subsections (a)(4) and 
(b)(2) of section 1563. 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of a 
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controlled group of entities if such entity is con-
trolled (within the meaning of section 954(d)(3)) 
by members of such group (including any entity 
treated as a member of such group by reason of 
this sentence). 
‘‘(4) FOREIGN PARENT CORPORATION.—For pur-
poses of this subsection, the term ‘foreign parent cor-
poration’ means, with respect to any deductible re-
lated-party payment, the common parent of the for-
eign controlled group of entities referred to in para-
graph (3)(A). 
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations or other guidance as are nec-
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance which provide for— 
‘‘(A) the treatment of two or more persons 
as members of a foreign controlled group of enti-
ties if such persons would be the common parent 
of such group if treated as one corporation, and 
‘‘(B) the treatment of any member of a for-
eign controlled group of entities as the common 
parent of such group if such treatment is appro-
priate taking into account the economic relation-
ships among such entities.’’. 
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