101 STAT. 1330-404
PUBLIC LAW 100-203—DEC. 22, 1987
year if 90 percent or more of the gross income of such partnership for such taxable year consists of quahfying income. .^
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"(3) EXCEPTION NOT TO APPLY TO CERTAIN PARTNERSHIPS WHICH COULD QUALIFY AS REGULATED INVESTMENT COMPANIES.—This
•:! PJ subsection shall not apply to any partnership which would be described in section 851(a) if such partnership were a domestic -^ corporation. To the extent provided in regulations, the precedi^ ing sentence shall not apply to any partnership a principal activity of which is the buying and selling of commodities (not described in section 1221(1)), or options, futures, or forwards with respect to commodities. "(d) QUALIFYING INCOME.—For purposes of this section— "Ai "(1) IN GENERAL.—Except as otherwise provided in this subsection, the term 'qualifying income' means— "(A) interest, - ^^ K "(B) dividends, 1, r'."(C) real property rents, "(D) gain from the sale or other disposition of real prop>io*%u erty (including property described in section 1221(1)), xl *^j ' (E) income and gains derived from the exploration, development, mining or production, processing, refining, " ^ -' transportation (including pipelines transporting gas, oil, or V products thereof), or the marketing of any mineral or natui- ^' ral resource (including fertilizer, geothermal energy, and '-'-"•" timber), s* tt^Y) any gain from the sale or disposition of a capital asset (or property described in section 1231(b)) held for the production of income described in any of the foregoing subparagraphs of this paragraph, and "(G) in the case of a partnership described in the second ^
- sentence of subsection (c)(3), income and gains from
commodities (not described in section 1221(1)) or futures, ir forwards, and options with respect to commodities. J "(2) CERTAIN INTEREST NOT QUALIFIED.—Interest shall not be ,> • (i '.f treated as qualifying income if— .T "(A) such interest is derived in the conduct of a financial or insurance business, or '. L.1. "(B) such interest would be excluded from the term « 'interest* under section 856(f). "(3) REAL PROPERTY RENT.—The term 'real property rent' ' means amounts which would qualify as rent from real property - under section 856(d) if such section were applied without regard •' to paragraph (2)(C) thereof (relating to independent contractor requirements). B
"(4) CERTAIN INCOME QUALIFYING UNDER REGULATED INVESTMENT COMPANY OR REAL ESTATE TRUST PROVISIONS.—The term
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'qualifying income' also includes any income which would qualify under section 851(b)(2) or 856(c)(2).
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"(5) SPECIAL RULE FOR DETERMINING GROSS INCOME FROM CERTAIN REAL PROPERTY SALES.—In the case of the sale or other
^•' "' disposition of real property described in section 1221(1), gross income shall not be reduced by inventory costs. "(e) INADVERTENT TERMINATIONS.—If^
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"(1) a partnership fails to meet the gross income requirements of subsection (c)(2), "(2) the Secretary determines that such failure was inadvertent,
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