Page:United States Statutes at Large Volume 111 Part 1.djvu/1027

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 1003 "(B) DEDUCTIONS FOR LOSS NOT SUBJECT TO SECTION 67.—The deduction under section 212 for any loss described in subparagraph (A) shall not be treated as a miscellaneous itemized deduction for purposes of section 67. "(4) TREATMENT OF NET CAPITAL GAIN OR LOSS.— For purposes of this chapter, any partner's distributive share of any gain or loss described in subsection (a)(3) shall be treated as a long-term capital gain or loss, as the case may be. "(5) MINIMUM TAX TREATMENT.— In determining the alternative minimum taxable income of any partner, such partner's distributive share of any applicable net AMT adjustment shall be taken into account in lieu of making the separate adjustments provided in sections 56, 57, and 58 with respect to the items of the partnership. Except as provided in regulations, the applicable net AMT adjustment shall be treated, for purposes of section 53, as an adjustment or item of tax preference not specified in section 53(d)(l)(B)(ii). "(6) GENERAL CREDITS.—A partner's distributive share of the amount referred to in paragraph (6) of subsection (a) shall be taken into account as a current year business credit. "(d) OPERATING RULES. —For purposes of this section— "(1) PASSIVE LOSS LIMITATION ACTIVITY. —The term 'passive loss limitation activity* means— "(A) any activity which involves the conduct of a trade or business, and "(B) any rental activity. For purposes of the preceding sentence, the term 'trade or business' includes any activity treated as a trade or business under paragraph (5) or (6) of section 469(c). "(2) TAX-EXEMPT INTEREST. —The term 'tax-exempt interest' means interest excludable from gross income under section 103. "(3) APPLICABLE NET AMT ADJUSTMENT.— "(A) IN GENERAL.—The applicable net AMT adjustment is— "(i) with respect to taxpayers other than corporations, the net adjustment determined by using the adjustments applicable to individuals, and "(ii) with respect to corporations, the net adjustment determined by using the adjustments applicable to corporations. " (B) NET ADJUSTMENT.—The term 'net adjustment' means the net adjustment in the items attributable to gassive loss activities or other activities (as the case may e) which would result if such items were determined with the adjustments of sections 56, 57, and 58. " (4) TREATMENT OF CERTAIN SEPARATELY STATED ITEMS.— "(A) EXCLUSION FOR CERTAIN PURPOSES. —In determining the amounts referred to in paragraphs (1) and (2) of subsection (a), any net capital gain or net capital loss (as the case may be), and any item referred to in subsection (a)(ll), shall be excluded. "(B) ALLOCATION RULES. — The net capital gain shall be treated— "(i) as allocable to passive loss limitation activities to the extent the net capital gain does not exceed the net capital gain determined by only taking into

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