Ill STAT. 834 PUBLIC LAW 105-34—AUG. 5, 1997 "(9) QUALIFIED 5-YEAR GAIN.— For purposes of this subsection, the term, 'quahfied 5-year gain' means the amount of long-term capital gain which would be computed for the taxable year if only gains from the sale or exchange of property held by the taxpayer for more than 5 years were taken into account. The determination under the preceding sentence shall be made without regard to collectibles gain, unrecaptured section 1250 gain (determined without regard to subparagraph (B) of paragraph (6)), section 1202 gain, or mid-term gain. "(10) PRE-EFFECTIVE DATE GAIN.— "(A) IN GENERAL.—In the case of a taxable year which includes May 7, 1997, gains and losses properly taken into account for the portion of the taxable year before May 7, 1997, shall be taken into account in determining mid-term gain as if such gains and losses were described in paragraph (8)(A). " (B) SPECIAL RULES FOR PASS-THRU ENTITIES. —In applying subparagraph (A) with respect to any pass-thru entity, the determination of when gains and loss are properly taken into account shall be made at the entity level. "(C) PASS-THRU ENTITY DEFINED.— For purposes of subparagraph (B), the term 'pass-thru entity means— "(i) a regulated investment company, "(ii) a real estate investment trust, "(iii) an S corporation, "(iv) a partnership, "(v) an estate or trust, and "(vi) a common trust fund. "(11) TREATMENT OF PASS-THRU ENTITIES.— The Secretary may prescribe such regulations as are appropriate (including regulations requiring reporting) to apply this subsection in the case of sales and exchanges by pass-thru entities (as defined in paragraph (10)(C)) and of interests in such entities.", (b) MINIMUM TAX.— (1) IN GENERAL. —Subsection (b) of section 55 is amended by adding at the end the following new paragraph: "(3) MAXIMUM RATE OF TAX ON NET CAPITAL GAIN OF NON- CORPORATE TAXPAYERS. —The amount determined under the first sentence of paragraph (l)(A)(i) shall not exceed the sum of— "(A) the amount determined under such first sentence computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the lesser of— "(i) the net capital gain, or "(ii) the sum of— "(I) the adjusted net capital gain, plus "(II) the unrecaptured section 1250 gain, plus "(B) 25 percent of the lesser of— "(i) the unrecaptured section 1250 gain, or "(ii) the amount of taxable excess in excess of the sum of— "(I) the adjusted net capital gain, plus "(II) the amount on which a tax is determined under subparagraph (A), plus "(C) 10 percent of so much of the taxpayer's adjusted net capital gain (or, if less, taxable excess) as does not
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