Page:United States Statutes at Large Volume 108 Part 6.djvu/439

 PUBLIC LAW 103-465—DEC. 8, 1994 108 STAT. 5007 (directly or indirectly) of marketable securities, money, or both, and not described in clause (v) but only to the extent of the value of such interest which is attributable to marketable securities, money, or both. "(C) FINANCIAL INSTRUMENT.— The term ^financial instrumenf includes stocks and other equity interests, evidences of indebtedness, options, forward or futures contracts, notional piincipal contracts, and derivatives. " (3) EXCEPTIONS.— "(A) IN GENERAL. —Paragraph (1) shall not apply to the distribution from a partnersmp of a marketable security to a partner if— "(i) the security was contributed to the partnership by such partner, except to the extent that the value of the distributed security is attributable to marketable seciuities or money contributed (directly or indirectly) to the entity to which the distributed security relates, "(ii) to the extent provided in regulations prescribed by the Secretary, the property was not a marketable security when acquired by such partnership, or "(iii) such partnership is an investment partnership and such partner is an eligible partner thereof "(B) LIMITATION ON GAIN RECOGNIZED.— In the case of a distribution of marketable securities to a partner, the amount taken into account under paragraph (1) shall be reduced (but not below zero) by the excess (if any) of— "(i) such partner's distributive share of the net gain which would be recognized if all of the marketable securities of the same class and issuer as the distributed securities held by the partnership were sold (immediately before the transaction to which the distribution relates) by the partnership for fair market value, over "(ii) such partner's distributive share of the net gain which is attributable to the marketable securities of the same class and issuer as the distributed securities held by the partnership) immediately after the transaction, determined by using the same fair market value as used under clause (i). Under regulations prescribed by the Secretary, all market- Regulations, able securities held by the partnership may be treated as marketable securities of the same class and issuer as the distributed securities. "(C) DEFINITIONS RELATING TO INVESTMENT PARTNER- SHIPS.—For purposes of subparagraph (A)(iii): "(i) INVESTMENT PARTNERSHIP.— The term 'investment pgutnership' means any partnership which has never been engaged in a trade or business and substantially all of the assets (by value) of which have always consisted of— - "(I) money, "(II) stock in a corporation,
 * '(vi) to the extent provided in regulations prescribed by the Secretary, any interest in an entity

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