Page:United States Statutes at Large Volume 111 Part 1.djvu/1030

 Ill STAT. 1006 PUBLIC LAW 105-34—AUG. 5, 1997 "(A) any credit recapture shall be taken into account by the partnership, and "(B) the amount of such recapture shall be determined as if the credit with respect to which the recapture is made had been fully utilized to reduce tax. " (2) METHOD OF TAKING RECAPTURE INTO ACCOUNT. —An electing large partnership shall take into account a credit recapture by reducing the amount of the appropriate current year credit to the extent thereof, and if such recapture exceeds the amount of such current year credit, the partnership shall be liable to pay such excess. "(3) DISPOSITIONS NOT TO TRIGGER RECAPTURE.—N O credit recapture shall be required by reason of any transfer of an interest in an electing large partnership. "(4) CREDIT RECAPTURE.—For purposes of this subsection, the term 'credit recapture' means any increase in tax under section 42(j) or 50(a). " (c) PARTNERSHIP NOT TERMINATED BY REASON OF CHANGE IN OWNERSHIP. — Subparagraph (B) of section 708(b)(1) shall not apply to an electing large partnership. "(d) PARTNERSHIP ENTITLED TO CERTAIN CREDITS.— The following shall be allowed to an electing large partnership and shall not be taken into account by the partners of such partnership: "(1) The credit provided by section 34. "(2) Any credit or refund xinder section 852(b)(3)(D). "(e) TREATMENT OF REMIC RESIDUALS.— For purposes of apply- ing section 860E(e)(6) to any electing large partnership)— "(1) all interests in such partnership shall be treated as held by disqualified organizations, "(2) in lieu of applying subparagraph (C) of section 860E(e)(6), the amount subject to tax under section 860E(e)(6) shall be excluded from the gross income of such partnership, and "(3) subparagraph (D) of section 860E(e)(6) shall not apply. " (f) SPECIAL RULES FOR APPLYING CERTAIN INSTALLMENT SALE RULES. — In the case of an electing large partnership— "(1) the provisions of sections 453(1)(3) and 453A shall be applied at the partnership level, and "(2) in determining the amount of interest payable under such sections, such partnership shall be treated as subject to tax under this chapter at the highest rate of tax in effect under section 1 or 11. "SEC. 775. ELECTING LARGE PARTNERSHIP DEFINED. "(a) GENERAL RULE. —For purposes of this part— "(1) IN GENERAL. —The term 'electing large partnership' means, with respect to any partnership taxable year, any partnership if— "(A) the number of persons who were partners in such partnership in the preceding partnership taxable year equaled or exceeded 100, and "(B) such partnership elects the application of this part. To the extent provided in regulations, a partnership shall cease to be treated as an electing large partnership for any partnership taxable year if in such taxable year fewer than 100 persons were partners in such partnership.

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