
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC775]

 
                     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. 775. Electing large partnership defined


(a) General rule

    For purposes of this part--

                           (1) In general

        The term ``electing large partnership'' means, with respect to 
    any partnership taxable year, any partnership if--
            (A) the number of persons who were partners in such 
        partnership in the preceding partnership taxable year equaled or 
        exceeded 100, and
            (B) such partnership elects the application of this part.

    To the extent provided in regulations, a partnership shall cease to 
    be treated as an electing large partnership for any partnership 
    taxable year if in such taxable year fewer than 100 persons were 
    partners in such partnership.

                            (2) Election

        The election under this subsection shall apply to the taxable 
    year for which made and all subsequent taxable years unless revoked 
    with the consent of the Secretary.

(b) Special rules for certain service partnerships

                  (1) Certain partners not counted

        For purposes of this section, the term ``partner'' does not 
    include any individual performing substantial services in connection 
    with the activities of the partnership and holding an interest in 
    such partnership, or an individual who formerly performed 
    substantial services in connection with such activities and who held 
    an interest in such partnership at the time the individual performed 
    such services.

                            (2) Exclusion

        For purposes of this part, an election under subsection (a) 
    shall not be effective with respect to any partnership if 
    substantially all the partners of such partnership--
            (A) are individuals performing substantial services in 
        connection with the activities of such partnership or are 
        personal service corporations (as defined in section 269A(b)) 
        the owner-employees (as defined in section 269A(b)) of which 
        perform such substantial services,
            (B) are retired partners who had performed such substantial 
        services, or
            (C) are spouses of partners who are performing (or had 
        previously performed) such substantial services.

            (3) Special rule for lower tier partnerships

        For purposes of this subsection, the activities of a partnership 
    shall include the activities of any other partnership in which the 
    partnership owns directly an interest in the capital and profits of 
    at least 80 percent.

(c) Exclusion of commodity pools

    For purposes of this part, an election under subsection (a) shall 
not be effective with respect to any partnership the principal activity 
of which is the buying and selling of commodities (not described in 
section 1221(a)(1)), or options, futures, or forwards with respect to 
such commodities.

(d) Secretary may rely on treatment on return

    If, on the partnership return of any partnership, such partnership 
is treated as an electing large partnership, such treatment shall be 
binding on such partnership and all partners of such partnership but not 
on the Secretary.

(Added Pub. L. 105-34, title XII, Sec. 1221(a), Aug. 5, 1997, 111 Stat. 
1006; amended Pub. L. 106-170, title V, Sec. 532(c)(2)(G), Dec. 17, 
1999, 113 Stat. 1930.)


                               Amendments

    1999--Subsec. (c). Pub. L. 106-170 substituted ``section 
1221(a)(1)'' for ``section 1221(1)''.


                    Effective Date of 1999 Amendment

    Amendment by Pub. L. 106-170 applicable to any instrument held, 
acquired, or entered into, any transaction entered into, and supplies 
held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. 
L. 106-170, set out as a note under section 170 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 6031, 6255 of this title.
