Page images
PDF
EPUB

For purposes of determining whether an exempt trust or organization is a limited partner or a general partner in a limited partnership, the interests of certain related parties would be taken into account. In addition, an exempt trust or organization which is a limited partner would be treated as owning an interest in any general partner held by any other exempt trust or organization (including related persons) that is a partner in the partnership.

The bill authorizes the Treasury Department to prescribe regulations that would deny the special treatment under the bill in any case in which multi-tier partnerships or other arrangements are used for the principal purpose of avoiding the conditions of the bill.

Debt-financed property

The bill would provide an exception to the rules relating to debtfinanced property for working interests in domestic oil and gas properties acquired by tax-qualified pension, etc., plans, IRAs, or certain educational organizations, which would be similar to the rules, under present law, that apply to investment by tax-qualified pension, etc., plans in debt-financed real property.

Under these rules, the exemption would only apply if the acquisition price is a fixed amount and payments are not dependent upon the profits from the property (items 1 and 2 under present law, above). However, the limitations relating to leases between related parties, acquisitions from related parties, and nonrecourse financing from related parties (items 3, 4, and 5, above) would not apply to any acquisition, lease, farm-out, or other transfer of a working interest to a person related to the general partner if the terms of the transfer are consistent with the terms of similar transfers in the same geographic area.

Effective Date

The bill would apply for partnership taxable years beginning after 1982.

[ocr errors]
« PreviousContinue »