Page:United States Statutes at Large Volume 111 Part 1.djvu/1048

 Ill STAT. 1024 PUBLIC LAW 105-34—AUG. 5, 1997 (b) SUSPENSION OF STATUTE DURING BANKRUPTCY PROCEED- ING. —Section 6229 is amended by adding at the end the following new subsection: "(h) SUSPENSION DURING PENDENCY OF BANKRUPTCY PROCEED- ING.— I f a petition is filed naming a partner as a debtor in a bankruptcy proceeding under title 11 of the United States Code, the running of the period of limitations provided in this section with respect to such partner shall be suspended— "(1) for the period during which the Secretary is prohibited by reason of such bankruptcy proceeding from making an assessment, and "(2) for 60 days thereafter.". (c) TAX MATTERS PARTNER IN BANKRUPTCY. —Section 6229(b) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: "(2) SPECIAL RULE WITH RESPECT TO DEBTORS IN TITLE 11 CASES.— Notwithstanding any other law or rule of law, if an agreement is entered into under paragraph (1)(B) and the agreement is signed by a person who would be the tax matters partner but for the fact that, at the time that the agreement is executed, the person is a debtor in a bankruptcy proceeding under title 11 of the United States Code, such agreement shall be binding on all partners in the partnership unless the Secretary has been notified of the bankruptcy proceeding in accordance with regulations prescribed by the Secretary.". 26 USC 6229 (d) EFFECTIVE DATES.— note. (1) SUBSECTIONS (a) AND (b).— The amendments made by subsections (a) and (b) shall apply to partnership taxable years with respect to which the period under section 6229 of the Internal Revenue Code of 1986 for assessing tax has not expired on or before the date of the enactment of this Act. (2) SUBSECTION (c).— The amendment made by subsection (c) shall apply to agreements entered into after the date of the enactment of this Act. SEC. 1234. EXPANSION OF SMALL PARTNERSHIP EXCEPTION. (a) IN GENERAL. —Clause (i) of section 6231(a)(1)(B) (relating to exception for small partnerships) is amended to read as follows: "(i) IN GENERAL.—The term 'partnership' shall not include any partnership having 10 or fewer partners each of whom is an individual (other than a nonresident alien), a C corporation, or an estate of a deceased partner. For puiposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner.". 26 USC 6231 (b) EFFECTIVE DATE.—The amendment made by this section i^ote. shall apply to partnership taxable years ending after the date of the enactment of this Act. SEC. 1235. EXCLUSION OF PARTIAL SETTLEMENTS FROM 1-YEAR LIMITATION ON ASSESSMENT. (a) IN GENERAL.— Subsection (f) of section 6229 (relating to items becoming nonpartnership items) is amended— (1) by striking "(f) ITEMS BECOMING NONPARTNERSHIP ITEMS. — I f' and inserting the following: " (f) SPECIAL RULES.— "(1) ITEMS BECOMING NONPARTNERSHIP ITEMS. —If,

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