
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC774]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                 Subchapter K--Partners and Partnerships
 
         PART IV--SPECIAL RULES FOR ELECTING LARGE PARTNERSHIPS
 
Sec. 774. Other modifications


(a) Treatment of certain optional adjustments, etc.

    In the case of an electing large partnership--
        (1) computations under section 773 shall be made without regard 
    to any adjustment under section 743(b) or 108(b), but
        (2) a partner's distributive share of any amount referred to in 
    section 772(a) shall be appropriately adjusted to take into account 
    any adjustment under section 743(b) or 108(b) with respect to such 
    partner.

(b) Credit recapture determined at partnership level

                           (1) In general

        In the case of an electing large partnership--
            (A) any credit recapture shall be taken into account by the 
        partnership, and
            (B) the amount of such recapture shall be determined as if 
        the credit with respect to which the recapture is made had been 
        fully utilized to reduce tax.

             (2) Method of taking recapture into account

        An electing large partnership shall take into account a credit 
    recapture by reducing the amount of the appropriate current year 
    credit to the extent thereof, and if such recapture exceeds the 
    amount of such current year credit, the partnership shall be liable 
    to pay such excess.

              (3) Dispositions not to trigger recapture

        No credit recapture shall be required by reason of any transfer 
    of an interest in an electing large partnership.

                        (4) Credit recapture

        For purposes of this subsection, the term ``credit recapture'' 
    means any increase in tax under section 42(j) or 50(a).

(c) Partnership not terminated by reason of change in ownership

    Subparagraph (B) of section 708(b)(1) shall not apply to an electing 
large partnership.

(d) Partnership entitled to certain credits

    The following shall be allowed to an electing large partnership and 
shall not be taken into account by the partners of such partnership:
        (1) The credit provided by section 34.
        (2) Any credit or refund under section 852(b)(3)(D) or 
    857(b)(3)(D).

(e) Treatment of REMIC residuals

    For purposes of applying section 860E(e)(6) to any electing large 
partnership--
        (1) all interests in such partnership shall be treated as held 
    by disqualified organizations,
        (2) in lieu of applying subparagraph (C) of section 860E(e)(6), 
    the amount subject to tax under section 860E(e)(6) shall be excluded 
    from the gross income of such partnership, and
        (3) subparagraph (D) of section 860E(e)(6) shall not apply.

(f) Special rules for applying certain installment sale rules

    In the case of an electing large partnership--
        (1) the provisions of sections 453(l)(3) and 453A shall be 
    applied at the partnership level, and
        (2) in determining the amount of interest payable under such 
    sections, such partnership shall be treated as subject to tax under 
    this chapter at the highest rate of tax in effect under section 1 or 
    11.

(Added Pub. L. 105-34, title XII, Sec. 1221(a), Aug. 5, 1997, 111 Stat. 
1005; amended Pub. L. 105-206, title VI, Sec. 6012(c), July 22, 1998, 
112 Stat. 819.)


                               Amendments

    1998--Subsec. (d)(2). Pub. L. 105-206 inserted ``or 857(b)(3)(D)'' 
before period at end.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-206 effective, except as otherwise 
provided, as if included in the provisions of the Taxpayer Relief Act of 
1997, Pub. L. 105-34, to which such amendment relates, see section 6024 
of Pub. L. 105-206, set out as a note under section 1 of this title.
