Page:United States Statutes at Large Volume 102 Part 4.djvu/748

 102 STAT. 3718

PUBLIC LAW 100-647—NOV. 10, 1988 "(iii) QuAUFiED FUND DEFINED.—For purposes of this subparagraph, the term 'qualiHed fund' means any partnership if— "(I) at all times during the taxable year (and during each preceding taxable year to which an election under subclause (V) applied), such partnership has at least 20 partners and no single partner owns more than 20 percent of the interests in the capital or profits of the partnership, '(II) the principal activity of such partnership for such taxable year (and each such preceding taxable year) consists of buying and selling options, futures, or forwards with respect to commodities, "(III) at least 90 percent of the gross income of the partnership for the taxable year (and for each such preceding taxable year) consisted of income or gains described in subparagraph (A), (B), or (G) of section 7704(d)(l) or gain from the sale or disposition of capital assets held for the production of interest or dividends, "(IV) no more than a de minimis amount of the gross income of the partnership for the taxable year (and each such preceding taxable year) was derived from buying and selling commodities, and "(V) an election under this subclause applies to the taxable year. An election under subclause (V) for any taxable year shall be made on or before the 1st day of such taxable year (or, if later, on or before the 1st day during such year on which the partnership holds an instrument referred to in clause (i)). Any such election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Secretary, "(iv) TREATMENT OF CERTAIN CURRENCY CONTRACTS.—

"(I) IN GENERAL.—Except as provided in regulations, in the case of a qualified fund, any bank forward contract, any foreign currency futures contract traded on a foreign exchange, or to the extent provided in regulations any similar instrument, which is not otherwise a section 1256 contract shall be treated as a section 1256 contract for purposes of section 1256. "(II) GAINS AND LOSSES TREATED AS SHORT-TERM.—

In the case of any instrument treated as a section 1256 contract under subclause (I), subparagraph (A) of section 1256(a)(3) shall be applied by substituting '100 percent* for '40 percent' (and subparagraph (B) of such section shall not apply), "(v) SPECIAL RULES FOR CLAUSE (iii)(I).— "(I) CERTAIN GENERAL PARTNERS.—The interest of

a general partner in the partnership shall not be treated as failing to meet the 20-percent ownership requirements of clause (iiiXD for any taxable year of the partnership if, for the taxable year of the partner in which such partnership taxable year ends, such partner (and each corporation filing a

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