[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2785 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 2785

    To amend the Internal Revenue Code of 1986 to provide that the 
    exception from the treatment of publicly traded partnerships as 
corporations for partnerships with passive-type income shall not apply 
 to partnerships directly or indirectly deriving income from providing 
       investment adviser and related asset management services.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 20, 2007

Mr. Welch of Vermont introduced the following bill; which was referred 
                   to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to provide that the 
    exception from the treatment of publicly traded partnerships as 
corporations for partnerships with passive-type income shall not apply 
 to partnerships directly or indirectly deriving income from providing 
       investment adviser and related asset management services.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. EXCEPTION FROM TREATMENT OF PUBLICLY TRADED PARTNERSHIPS AS 
              CORPORATIONS NOT TO APPLY TO PARTNERSHIPS DIRECTLY OR 
              INDIRECTLY DERIVING INCOME FROM PROVIDING INVESTMENT 
              ADVISER AND RELATED ASSET MANAGEMENT SERVICES.

    (a) In General.--Section 7704(c) of the Internal Revenue Code of 
1986 (relating to exception for partnerships with passive-type income) 
is amended by adding at the end the following new paragraph:
            ``(4) Exception not to apply to partnerships providing 
        certain investment adviser and related asset management 
        services.--This subsection shall not apply to any partnership 
        which directly or indirectly has any item of income or gain 
        (including capital gains or dividends), the rights to which are 
        derived from--
                    ``(A) services provided by any person as an 
                investment adviser (as defined in section 202(a)(11) of 
                the Investment Advisers Act of 1940, 15 U.S.C. 80b-
                2(a)(11)) or as a person associated with an investment 
                adviser (as defined in section 202(a)(17) of the 
                Investment Advisers Act of 1940, 15 U.S.C. 80b-
                2(a)(17)), or
                    ``(B) asset management services provided by any 
                person described in subparagraph (A) (or any related 
                person) in connection with the management of assets 
                with respect to which services described in 
                subparagraph (A) were provided.
        For purposes of subparagraph (A), the determination as to 
        whether services provided by any person were provided as an 
        investment adviser shall be made without regard to whether the 
        person is required to register as an investment adviser under 
        the Investment Advisers Act of 1940.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall apply to taxable years of 
        a partnership beginning on or after June 20, 2007.
            (2) Transition rule for certain partnerships.--In the case 
        of a partnership the interests in which on June 20, 2007, 
        were--
                    (A) traded on an established securities market, or
                    (B) readily tradeable on a secondary market (or the 
                substantial equivalent thereof),
        the amendment made by this section shall apply to taxable years 
        of the partnership beginning on or after June 20, 2007.
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