118 STAT. 1592 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(e) EXCEPTION FOR SECURITIZATION PARTNERSHIPS.—For pur poses of this section, a securitization partnership (as defined in section 743(f)) shall not be treated as having a substantial basis reduction with respect to any distribution of property to a partner.’’. (5) CLERICAL AMENDMENTS.—(A) The section heading for section 734 is amended to read as follows: ‘‘SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP PROPERTY WHERE SECTION 754 ELECTION OR SUBSTAN TIAL BASIS REDUCTION.’’. (B) The table of sections for subpart B of part II of sub chapter K of chapter 1 is amended by striking the item relating to section 734 and inserting the following new item: ‘‘Sec. 734. Adjustment to basis of undistributed partnership property where section 754 election or substantial basis reduction.’’. (d) EFFECTIVE DATES.— (1) SUBSECTION (a).—The amendment made by subsection (a) shall apply to contributions made after the date of the enactment of this Act. (2) SUBSECTION (b).— (A) IN GENERAL.—Except as provided in subparagraph (B), the amendments made by subsection (b) shall apply to transfers after the date of the enactment of this Act. (B) TRANSITION RULE.—In the case of an electing investment partnership which is in existence on June 4, 2004, section 743(e)(6)(H) of the Internal Revenue Code of 1986, as added by this section, shall not apply to such partnership and section 743(e)(6)(I) of such Code, as so added, shall be applied by substituting ‘‘20 years’’ for ‘‘15 years’’. (3) SUBSECTION (c).—The amendments made by subsection (c) shall apply to distributions after the date of the enactment of this Act. SEC. 834. NO REDUCTION OF BASIS UNDER SECTION 734 IN STOCK HELD BY PARTNERSHIP IN CORPORATE PARTNER. (a) IN GENERAL.—Section 755 is amended by adding at the end the following new subsection: ‘‘(c) NO ALLOCATION OF BASIS DECREASE TO STOCK OF COR PORATE PARTNER.—In making an allocation under subsection (a) of any decrease in the adjusted basis of partnership property under section 734(b)— ‘‘(1) no allocation may be made to stock in a corporation (or any person related (within the meaning of sections 267(b) and 707(b)(1)) to such corporation) which is a partner in the partnership, and ‘‘(2) any amount not allocable to stock by reason of para graph (1) shall be allocated under subsection (a) to other part nership property. Gain shall be recognized to the partnership to the extent that the amount required to be allocated under paragraph (2) to other partnership property exceeds the aggregate adjusted basis of such other property immediately before the allocation required by para graph (2).’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to distributions after the date of the enactment of this Act. 26 USC 755 note. 26 USC 734 note. 26 USC 743 note. 26 USC 704 note.
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