Page:United States Statutes at Large Volume 98 Part 1.djvu/564

 98 STAT. 516

PUBLIC LAW 98-369—JULY 18, 1984 "(8) TAX-EXEMPT USE OF PROPERTY LEASED TO PARTNERSHIPS,

Post, p. 517.

ETC., DETERMINED AT PARTNER LEVEL.—For purposes of this subsection and paragraphs (4) and (5) of section 48(a)— "(A) IN GENERAL.—In the case of any property which is leased to a partnership, the determination of whether any portion of such property is tax-exempt use property shall be made by treating each tax-exempt entity partner's proportionate share (determined under paragraph (9)(C)) of such property as being leased to such partner. "(B) OTHER PASS-THRU ENTITIES; TIERED ENTITIES.—Rules

similar to the rules of subparagraph (A) shall also apply in the case of any pass-thru entity other than a partnership and in the case of tiered partnerships and other entities. "(C) PRESUMPTION WITH RESPECT TO FOREIGN ENTITIES.—

Unless it is otherwise established to the satisfaction of the Secretary, it shall be presumed that the partners of a foreign partnership (and the beneficiaries of any other foreign pass-thru entity) are persons who are not United States persons. "(9) TREATMENT OF PROPERTY OWNED BY PARTNERSHIPS, ETC.—

Post, p. 589.

"(A) IN GENERAL.—For purposes of this subsection and paragraphs (4) and (5) of section 48(a), if— "(i) any property which (but for this subparagraph) is not tax-exempt use property is owned by a partnership which has both a tax-exempt entity and a person who is not a tax-exempt entity as partners, and "(ii) any allocation to the tax-exempt entity of partnership items is not a qualified allocation, an amount equal to such tax-exempt entity's proportionate share of such property shall (except as provided in paragraph (3)(D)) be treated as tax-exempt use property. "(B) QuAUFiED ALLOCATION.—For purposes of subparagraph (A), the term 'qualified allocation' means any allocation to a tax-exempt entity which— "(i) is consistent with such entity's being allocated the same distributive share of each item of income, gain, loss deduction, credit, and basis and such share remains the same during the entire period the entity is a partner in the partnership, and "(ii) has substantial economic effect within the meaning of section 704(b)(2). For purposes of this subparagraph, items allocated under section 704(c) shall not be taken into account. "(C) DETERMINATION OF PROPORTIONATE SHARE.—

"(i) IN GENERAL.—For purposes of subparagraph (A), a tax-exempt entity's proportionate share of any property owned by a partnership shall be determined on the basis of such entity's share of partnership items of income or gain (excluding gain allocated under section 704(c)), whichever results in the largest proportionate share. "(ii) DETERMINATION WHERE ALLOCATIONS VARY.—For

purposes of clause (i), if a tax-exempt entity's share of partnership items of income or gain (excluding gain allocated under section 704(c)) may vary during the period such entity is a partner in the partnership, such

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