To amend the Internal Revenue Code of 1986 to provide that indebtedness incurred by a partnership in acquiring securities and commodities is not treated as acquisition indebtedness for purposes of determining the unrelated business taxable income of organizations which are partners with limited liability.

Amends Internal Revenue Code provisions relating to the tax on the unrelated business income of tax-exempt organizations to exempt from treatment as acquisition indebtedness (subject to the unrelated business income tax) indebtedness incurred or continued by an organization which is a partner with limited liability in a partnership to purchase or carry certain securities or commodities.

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3497 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3497

To amend the Internal Revenue Code of 1986 to provide that indebtedness 
 incurred by a partnership in acquiring securities and commodities is 
not treated as acquisition indebtedness for purposes of determining the 
 unrelated business taxable income of organizations which are partners 
                        with limited liability.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 31, 2009

 Mr. Levin (for himself, Mr. Van Hollen, and Mr. McDermott) 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 indebtedness 
 incurred by a partnership in acquiring securities and commodities is 
not treated as acquisition indebtedness for purposes of determining the 
 unrelated business taxable income of organizations which are partners 
                        with limited liability.

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

SECTION 1. INDEBTEDNESS INCURRED BY A PARTNERSHIP IN ACQUIRING 
              SECURITIES AND COMMODITIES NOT TREATED AS ACQUISITION 
              INDEBTEDNESS FOR PURPOSES OF DETERMINING UNRELATED 
              BUSINESS TAXABLE INCOME OF ORGANIZATIONS WHICH ARE 
              PARTNERS WITH LIMITED LIABILITY.

    (a) In General.--Subsection (c) of section 514 of the Internal 
Revenue Code of 1986 (relating to acquisition indebtedness) is amended 
by adding at the end the following new paragraph:
            ``(10) Securities and commodities acquired by partnerships 
        in which an organization is a partner with limited liability.--
                    ``(A) In general.--In the case of any organization 
                which is a partner with limited liability in a 
                partnership, the term `acquisition indebtedness' does 
                not, for purposes of this section, include indebtedness 
                incurred or continued by such partnership in purchasing 
                or carrying any qualified security or commodity.
                    ``(B) Qualified security or commodity.--For 
                purposes of this paragraph, the term `qualified 
                security or commodity' means any security (as defined 
                in section 475(c)(2) without regard to the last 
                sentence thereof), any commodity (as defined in section 
                475(e)(2)), or any option or derivative contract with 
                respect to such a security or commodity.
                    ``(C) Application to tiered partnerships and other 
                pass-thru entities.--Rules similar to the rules of 
                subparagraph (A) shall apply in the case of tiered 
                partnerships and other pass-thru entities.
                    ``(D) Regulations.--The Secretary may prescribe 
                such regulations as may be necessary or appropriate to 
                carry out the purposes of this paragraph, including 
                regulations to prevent the abuse of this paragraph.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.
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