PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 1011 taxable year after the adjusted year and before the partnership taxable year in which such partnership adjustment takes effect, such other adjustment shall be taken into account under this subsection for the partnership taxable year in which such partnership adjustment takes effect. "(4) COORDINATION WITH PART II.— Amounts taken into account under this subsection for any partnership taxable year shall continue to be treated as adjustments for the adjusted year for purposes of determining whether such amounts may be readjusted under part IL "(b) PARTNERSHIP LIABLE FOR INTEREST AND PENALTIES. — "(1) IN GENERAL.— If a partnership adjustment takes effect during any partnership taxable year and such adjustment results in an imputed underpayment for the adjusted year, the partnership— "(A) shall pay to the Secretary interest computed under paragraph (2), and "(B) shall be liable for any penalty, addition to tax, or additional amount as provided in paragraph (3). "(2) DETERMINATION OF AMOUNT OF INTEREST.— The interest computed under this paragraph with respect to any partnership adjustment is the interest which would be determined under chapter 67— "(A) on the imputed underpayment determined under paragraph (4) with respect to such adjustment, "(B) for the period beginning on the day after the return due date for the adjusted year and ending on the return due date for the partnership taxable year in which such adjustment teikes effect (or, if earlier, in the case of any adjustment to which subsection (a)(2) applies, the date on which the payment under subsection (a)(2) is made). Proper adjustments in the amount determined under the preceding sentence shall be made for adjustments required for partnership taxable years after the adjusted year and before the year in which the partnership adjustment takes effect by reason of such partnership adjustment. " (3) PENALTIES. — ^A partnership shall be liable for any penalty, addition to tax, or additional amount for which it would have been liable if such partnership had been an individual subject to tax under chapter 1 for the adjusted year and the imputed underpayment determined under paragraph (4) were an actual underpayment (or understatement) for such year. "(4) IMPUTED UNDERPAYMENT.— For purposes of this subsection, the imputed underpayment determined under this paragraph with respect to any partnership adjustment is the underpayment (if any) which would result— "(A) by netting all adjustments to items of income, gain, loss, or deduction and by treating any net increase in income as an underpa3anent equal to the amount of such net increase multiplied by the highest rate of tax in effect under section 1 or 11 for the adjusted year, and "(B) by taking adjustments to credits into account as increases or decreases (whichever is appropriate) in the amount of tax.
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