118 STAT. 1476 PUBLIC LAW 108–357—OCT. 22, 2004 (e) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to expenditures paid or incurred after the date of the enactment of this Act. Subtitle C—Incentives for Small Manufacturers SEC. 331. NET INCOME FROM PUBLICLY TRADED PARTNERSHIPS TREATED AS QUALIFYING INCOME OF REGULATED INVESTMENT COMPANIES. (a) IN GENERAL.—Paragraph (2) of section 851(b) (defining regu lated investment company) is amended to read as follows: ‘‘(2) at least 90 percent of its gross income is derived from— ‘‘(A) dividends, interest, payments with respect to secu rities loans (as defined in section 512(a)(5)), and gains from the sale or other disposition of stock or securities (as defined in section 2(a)(36) of the Investment Company Act of 1940, as amended) or foreign currencies, or other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies, and ‘‘(B) net income derived from an interest in a qualified publicly traded partnership (as defined in subsection (h)); and’’. (b) SOURCE FLOW THROUGH RULE NOT TO APPLY.—The last sentence of section 851(b) is amended by inserting ‘‘(other than a qualified publicly traded partnership as defined in subsection (h))’’ after ‘‘derived from a partnership’’. (c) LIMITATION ON OWNERSHIP.—Subsection (c) of section 851 is amended by redesignating paragraph (5) as paragraph (6) and inserting after paragraph (4) the following new paragraph: ‘‘(5) The term ‘outstanding voting securities of such issuer’ shall include the equity securities of a qualified publicly traded partnership (as defined in subsection (h)).’’. (d) DEFINITION OF QUALIFIED PUBLICLY TRADED PARTNER SHIP.—Section 851 is amended by adding at the end the following new subsection: ‘‘(h) QUALIFIED PUBLICLY TRADED PARTNERSHIP.—For purposes of this section, the term ‘qualified publicly traded partnership’ means a publicly traded partnership described in section 7704(b) other than a partnership which would satisfy the gross income requirements of section 7704(c)(2) if qualifying income included only income described in subsection (b)(2)(A).’’. (e) DEFINITION OF QUALIFYING INCOME.—Section 7704(d)(4) is amended by striking ‘‘section 851(b)(2)’’ and inserting ‘‘section 851(b)(2)(A)’’. (f) LIMITATION ON COMPOSITION OF ASSETS.—Subparagraph (B) of section 851(b)(3) is amended to read as follows: ‘‘(B) not more than 25 percent of the value of its total assets is invested in— ‘‘(i) the securities (other than Government securi ties or the securities of other regulated investment companies) of any one issuer,
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