26 U.S.C. § 7704
For purposes of this title, except as provided in subsection (c), a publicly traded partnership shall be treated as a corporation.
For purposes of this section, the term "publicly traded partnership" means any partnership if-
Subsection (a) shall not apply to any publicly traded partnership for any taxable year if such partnership met the gross income requirements of paragraph (2) for such taxable year and each preceding taxable year beginning after December 31, 1987, during which the partnership (or any predecessor) was in existence. For purposes of the preceding sentence, a partnership shall not be treated as being in existence during any period before the 1st taxable year in which such partnership (or a predecessor) was a publicly traded partnership.
A partnership meets the gross income requirements of this paragraph for any taxable year if 90 percent or more of the gross income of such partnership for such taxable year consists of qualifying income.
This subsection shall not apply to any partnership which would be described in section 851(a) if such partnership were a domestic corporation. To the extent provided in regulations, the preceding sentence shall not apply to any partnership a principal activity of which is the buying and selling of commodities (not described in section 1221(a)(1)), or options, futures, or forwards with respect to commodities.
For purposes of this section-
Except as otherwise provided in this subsection, the term "qualifying income" means-
For purposes of subparagraph (E), the term "mineral or natural resource" means any product of a character with respect to which a deduction for depletion is allowable under section 611; except that such term shall not include any product described in subparagraph (A) or (B) of section 613(b)(7).
Interest shall not be treated as qualifying income if-
The term "real property rent" means amounts which would qualify as rent from real property under section 856(d) if-
The term "qualifying income" also includes any income which would qualify under section 851(b)(2)(A) or 856(c)(2).
In the case of the sale or other disposition of real property described in section 1221(a)(1), gross income shall not be reduced by inventory costs.
If-
then, notwithstanding such failure, such entity shall be treated as continuing to meet such gross income requirements for such period.
As of the 1st day that a partnership is treated as a corporation under this section, for purposes of this title, such partnership shall be treated as-
Subsection (a) shall not apply to an electing 1987 partnership.
For purposes of this subsection, the term "electing 1987 partnership" means any publicly traded partnership if-
A partnership which, but for this sentence, would be treated as an electing 1987 partnership shall cease to be so treated (and the election under subparagraph (C) shall cease to be in effect) as of the 1st day after December 31, 1997, on which there has been an addition of a substantial new line of business with respect to such partnership.
There is hereby imposed for each taxable year on the income of each electing 1987 partnership a tax equal to 3.5 percent of such partnership's gross income for the taxable year from the active conduct of trades and businesses by the partnership.
For purposes of this paragraph, in the case of a partnership which is a partner in another partnership, the gross income referred to in subparagraph (A) shall include the partnership's distributive share of the gross income of such other partnership from the active conduct of trades and businesses of such other partnership. A similar rule shall apply in the case of lower-tiered partnerships.
For purposes of this title, the tax imposed by this paragraph shall be treated as imposed by chapter 1 other than for purposes of determining the amount of any credit allowable under chapter 1 and shall be paid by the partnership. Section 6655 shall be applied to such partnership with respect to such tax in the same manner as if the partnership were a corporation, such tax were imposed by section 11, and references in such section to taxable income were references to the gross income referred to in subparagraph (A).
An election and consent under this subsection shall apply to the taxable year for which made and all subsequent taxable years unless revoked by the partnership. Such revocation may be made without the consent of the Secretary, but, once so revoked, may not be reinstated.
26 U.S.C. § 7704
EDITORIAL NOTES
REFERENCES IN TEXTSection 10211(c)(2) of the Revenue Reconciliation Act of 1987, referred to in subsec. (g)(2)(A), probably means section 10211(c)(2) of the Revenue Act of 1987, title X of Pub. L. 100-203, which is set out as a note below.
AMENDMENTS2008-Subsec. (d)(1)(E). Pub. L. 110-343, §208(a), substituted ", industrial source carbon dioxide, or the transportation or storage of any fuel described in subsection (b), (c), (d), or (e) of section 6426, or any alcohol fuel defined in section 6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1)" for "or industrial source carbon dioxide". Pub. L. 110-343, §116(a), inserted "or industrial source carbon dioxide" before comma at end.2004-Subsec. (d)(4). Pub. L. 108-357 substituted "section 851(b)(2)(A)" for "section 851(b)(2)". 1999-Subsecs. (c)(3), (d)(1)(D), (G), (5). Pub. L. 106-170 substituted "section 1221(a)(1)" for "section 1221(1)". 1998-Subsec. (g)(3)(C). Pub. L. 105-206 inserted at end "and shall be paid by the partnership. Section 6655 shall be applied to such partnership with respect to such tax in the same manner as if the partnership were a corporation, such tax were imposed by section 11, and references in such section to taxable income were references to the gross income referred to in subparagraph (A)".1997-Subsec. (g). Pub. L. 105-34 added subsec. (g).1988-Subsec. (c)(1). Pub. L. 100-647, §2004(f)(3), inserted at end "For purposes of the preceding sentence, a partnership shall not be treated as being in existence during any period before the 1st taxable year in which such partnership (or a predecessor) was a publicly traded partnership."Subsec. (d)(1). Pub. L. 100-647, §2004(f)(4), inserted at end "For purposes of subparagraph (E), the term 'mineral or natural resource' means any product of a character with respect to which a deduction for depletion is allowable under section 611; except that such term shall not include any product described in subparagraph (A) or (B) of section 613(b)(7)."Subsec. (d)(3). Pub. L. 100-647, §2004(f)(5), amended par. (3) generally. Prior to amendment, par. (3) read as follows: "The term 'real property rent' means amounts which would qualify as rent from real property under section 856(d) if such section were applied without regard to paragraph (2)(C) thereof (relating to independent contractor requirements)."Subsec. (e)(4). Pub. L. 100-647, §2004(f)(1), inserted "or to pay such amounts" before "as may be required".
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110-343, div. B, title I, §116(b), Oct. 3, 2008, 122 Stat. 3831, provided that: "The amendment made by this section [amending this section] shall take effect on the date of the enactment of this Act [Oct. 3, 2008], in taxable years ending after such date." Pub. L. 110-343, div. B, title II, §208(b), Oct. 3, 2008, 122 Stat. 3840, provided that: "The amendment made by this section [amending this section] shall take effect on the date of the enactment of this Act [Oct. 3, 2008], in taxable years ending after such date."
EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108-357 applicable to taxable years beginning after Oct. 22, 2004, see section 331(h) of Pub. L. 108-357, set out as a note under section 469 of this title.
EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106-170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. L. 106-170, set out as a note under section 170 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105-206, §6009(b)(2), July 22, 1998, 112 Stat. 812, provided that: "The second sentence of section 7704(g)(3)(C) of the 1986 Code (as added by paragraph (1)) shall apply to taxable years beginning after the date of the enactment of this Act [July 22, 1998]."
EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105-34, §964(b), Aug. 5, 1997, 111 Stat. 893, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 1997."
EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100-203, title X, to which such amendment relates, see section 2004(u) of Pub. L. 100-647, set out as a note under section 56 of this title.
EFFECTIVE DATEPub. L. 100-203, title X, §10211(c), Dec. 22, 1987, 101 Stat. 1330-405, as amended by Pub. L. 100-647, title II, §2004(f)(2), Nov. 10, 1988, 102 Stat. 3602, provided that:"(1) IN GENERAL.-The amendments made by this section [enacting this section] shall apply-"(A) except as provided in subparagraph (B), to taxable years beginning after December 31, 1987, or"(B) in the case of an existing partnership, to taxable years beginning after December 31, 1997."(2) EXISTING PARTNERSHIP.-For purposes of this subsection-"(A) IN GENERAL.-The term 'existing partnership' means any partnership if- "(i) such partnership was a publicly traded partnership on December 17, 1987,"(ii) a registration statement indicating that such partnership was to be a publicly traded partnership was filed with the Securities and Exchange Commission with respect to such partnership on or before such date, or"(iii) with respect to such partnership, an application was filed with a State regulatory commission on or before such date seeking permission to restructure a portion of a corporation as a publicly traded partnership."(B) SPECIAL RULE WHERE SUBSTANTIAL NEW LINE OF BUSINESS ADDED AFTER DECEMBER 17, 1987.-A partnership which, but for this subparagraph, would be treated as an existing partnership shall cease to be treated as an existing partnership as of the 1st day after December 17, 1987, on which there has been an addition of a substantial new line of business with respect to such partnership."(C) COORDINATION WITH PASSIVE-TYPE INCOME REQUIREMENTS.-In the case of an existing partnership, paragraph (1) of section 7704(c) of the Internal Revenue Code of 1986 (as added by this section) shall be applied by substituting for 'December 31, 1987' the earlier of-"(i) December 31, 1997, or "(ii) the day (if any) as of which such partnership ceases to be treated as an existing partnership by reason of subparagraph (B)."
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- stock
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- transaction
- The term "transaction" includes a series of transactions.