PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3719
consolidated return with such partner) had no ordinary income or loss from a section 988 transaction which is foreign currency gain or loss (as the case maybe). "(ID TREATMENT OF INCENTIVE COMPENSATION.—
For purposes of clause (iiiXD, any income allocable to a general partner as incentive compensation based on profits rather than capital shall not be taken into account in determining such partner's interest in the profits of the partnership. "(Ill) TREATMENT OF TAX-EXEMPT PARTNERS.— Except as provided in regulations, the interest of a partner in the partnership shall not be treated as failing to meet the 20-percent ownership requirements of clause (iiiXD if none of the income of such partner from such partnership is subject to tax under this chapter (whether directly or through 1 or more pass-thru entities). "(IV) LOOK-THRU RULE.—In determining whether the requirements of clause (iiiXI) are met with respect to any partnership, except to the extent provided in regulations, any interest in such partnership held by another partnership shall be treated as held proportionately by the partners in such other partnership, "(vi) OTHER SPECIAL RULES.—For purposes of this subparagraph— "(I) RELATED PERSONS.—Interests in the partner-
ship held by persons related to each other (within the meaning of sections 267(b) and 707(b)) shall be treated as held by 1 person. "(II) PREDECESSORS.—References to any partnership shall include a reference to any predecessor thereof. "(Ill) INADVERTENT TERMINATIONS.—Rules similar to the rules of section 7704(e) shall apply. "(IV)
TREATMENT
OF
CERTAIN
DEBT
INSTRUMENTS.—For purposes of clause (iiiXIV), any debt instrument which is a section 988 transaction shall be treated as a commodity." (c) AMENDMENT OF SECTION 1092(b).—Paragraph (2) of section 1092(b) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: "(D) TIMING AND CHARACTER AUTHORITY.—The regulations prescribed under paragraph (1) shall include regulations relating to the timing and character of gains and losses in case of straddles where at least 1 position is ordinary and at least 1 position is capital." (d) EFFECTIVE DATE.— (1) IN GENERAL.—The amendments made by this section shall apply with respect to forward contracts, future contracts, options, and similar instruments entered into or acquired after October 21, 1988. (2) TIME FOR MAKING ELECTION.—The time for making any election under subparagraph (D) or (E) of section 988(c)(l) of the 1986 Code shall not expire before the date 30 days after the date of the enactment of this Act.
26 USC 988 note.
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