I 111th CONGRESS 1st Session H. R. 2762 IN THE HOUSE OF REPRESENTATIVES June 8, 2009 Mr. Welch 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.

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

The amendment made by this section shall apply to taxable years of a partnership beginning on or after the date of the enactment of this Act.