Page:United States Statutes at Large Volume 111 Part 1.djvu/1029

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 1005 partnership shall be applied at the partnership level (and not at the partner level). "(B) CERTAIN LIMITATIONS APPLIED AT PARTNER LEVEL.—The following provisions shall be applied at the partner level (and not at the partnership level): "(i) Section 68 (relating to overall limitation on itemized deductions). "(ii) Sections 49 and 465 (relating to at risk limitations). "(iii) Section 469 (relating to limitation on passive activity losses and credits). "(iv) Any other provision specified in regulations. "(4) COORDINATION WITH OTHER PROVISIONS. —Paragraphs Applicability. (2) and (3) shall apply notwithstanding any other provision of this chapter other than this part. "(b) MODIFICATIONS TO DETERMINATION OF TAXABLE INCOME. — In determining the taxable income of an electing large partnership— "(1) CERTAIN DEDUCTIONS NOT ALLOWED.—The following deductions shall not be allowed: "(A) The deduction for personal exemptions provided in section 151. "(B) The net operating loss deduction provided in section 172. "(C) The additional itemized deductions for individuals provided in part VII of subchapter B (other than section 212 thereof). "(2) CHARITABLE DEDUCTIONS.— In determining the amount allowable under section 170, the limitation of section 170(b)(2) shall apply. "(3) COORDINATION WITH SECTION 67. — In lieu of applying section 67, 70 percent of the amount of the miscellaneous itemized deductions shall be disallowed. "(c) SPECIAL RULES FOR INCOME FROM DISCHARGE OF INDEBTED- NESS. —I f an electing large partnership has income from the discharge of any indebtedness— "(1) such income shall be excluded in determining the amounts referred to in section 772(a), and "(2) in determining the income tax of any partner of such partnership— "(A) such income shall be treated as an item required to be separately taken into account under section 772(a), and "(B) the provisions of section 108 shall be applied without regard to this part. "SEC. 774. OTHER MODIFICATIONS. "(a) TREATMENT OF CERTAIN OPTIONAL ADJUSTMENTS, ETC.— In the case of an electing large partnership— "(1) computations under section 773 shall be made without regard to any adjustment under section 743(b) or 108(b), but "(2) a partner's distributive share of any amount referred to in section 772(a) shall be appropriately adjusted to take into account any adjustment under section 743(b) or 108(b) with respect to such partner. "(b) CREDIT RECAPTURE DETERMINED AT PARTNERSHIP LEVEL.— "(1) IN GENERAL.—In the case of an electing large partnership—

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