Page:United States Statutes at Large Volume 98 Part 1.djvu/638

 98 STAT. 590

PUBLIC LAW 98-369—JULY 18, 1984 "(B) ALLOCABLE CASH BASIS ITEM.—For purposes of this paragraph, the term 'allocable cash basis item' means any of the following items which are described in paragraph (1) and with respect to which the partnership uses the cash receipts and disbursements method of accounting: "(i)Interest. "(ii) Taxes. "(iii) Payments for services or for the use of property. "(iv) Any other item of a kind specified in regulations prescribed by the Secretary as being ein item with respect to which the application of this paragraph is appropriate to avoid significant misstatements of the income of the partners.

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"(C) ITEMS ATTRIBUTABLE TO PERIODS NOT WITHIN TAXABLE

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YEAR.—If any portion of any allocable cash basis item is attributable to— "(i) any period before the beginning of the taxable year, such portion shall be assigned under subparagraph (A)(i) to the first day of such taxable year, or "(ii) any period after the close of the taxable year, such portion shall be assigned under subparagraph (A)(i) to the last day of the taxable year. "(D)

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TREATMENT OF DEDUCTIBLE ITEMS ATTRIBUTABLE TO

PRIOR PERIODS.—If any portion of a deductible cash basis item is assigned under subparagraph (C)(i) to the first day of any taxable year— "(i) such portion shall be allocated among persons who are partners in the partnership during the period RUtfi'Tif to which such portion is attributable in accordance with their varying interests in the partnership during such period, and "(ii) any amount allocated under clause (i) to a person who is not a partner in the partnership on such first day shall be capitalized by the partnership and treated in the manner provided for in section 755. "(3) ITEMS ATTRIBUTABLE TO INTEREST I N LOWER TIER PARTNER-

SHIP PRORATED OVER ENTIRE TAXABLE YEAR.—If—

"(A) during any taxable year of the partnership there is a change in any partner's interest in the partnership (hereinafter in this paragraph referred to as the 'upper tier partnership'), and "(B) such partnership is a partner in another partnership (hereinafter in this paragraph referred to as the 'lower tier partnership'), then (except to the extent provided in regulations) each partner's distributive share of any item of the upper tier partnership attributable to the lower tier partnership shall be determined by assigning the appropriate portion (determined by applying principles similar to the principles of subparagraphs (C) and (D) of paragraph (2)) of each such item to the appropriate days during which the upper tier partnership is a partner in the lower tier partnership and by allocating the portion assigned to any such day among the partners in proportion to their interests in the upper tier partnership at the close of such day. "(4) TAXABLE YEAR DETERMINED WITHOUT REGARD TO SUBSECTION (c)(2)(A).—For purposes of this subsection, the taxable

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