Summary#
This bill changes parts of the Internal Revenue Code that apply to publicly traded partnerships. Key changes in the bill text include:
- Adds a new rule to section 512(b) to exclude any income, gain, deduction, loss, or credit attributable to publicly traded classes of units of a publicly traded partnership from unrelated business taxable income, if the beneficial owner owns (or is treated as owning) less than 5% of the partnership's capital or profits.
- Edits the 25 percent asset test for regulated investment companies by removing a clause in section 851(b)(3)(B).
- Removes a special passive-activity rule for publicly traded partnerships by striking subsection (k) of section 469 and redesignating subsection (l) as subsection (k).
- Adds an exception in section 864(c)(8) so that the sale or exchange of a partnership class that is regularly traded on an established securities exchange is not treated as effectively connected income when the seller held not more than 10% of that class during the 5 years before the sale.
- Changes section 1446(f)(1) to exclude such regularly traded classes of partnership interest from certain withholding requirements.
The bill's effective date is for taxable years beginning after December 31, 2026.
What it means for you#
- Investors in publicly traded partnership classes: If you own less than 5% of a publicly traded partnership class, the bill text says income or losses tied to that class are excluded from unrelated business taxable income for those units.
- Sellers of regularly traded partnership classes: A sale of a class that is regularly traded on an established securities exchange would not be treated as effectively connected income under the text if the seller held no more than 10% of that class during the prior five years. The bill also says such classes are excluded from a specific withholding rule.
- Regulated investment companies and fund managers: The bill removes a clause from the 25 percent asset test used in section 851(b)(3)(B), changing how that test is written in the tax code.
- Passive activity rules: The bill removes a separate application of passive activity rules that previously applied to publicly traded partnerships, by striking subsection (k) of section 469.
- Timing: These changes apply to taxable years beginning after December 31, 2026.
Expenses#
No publicly available information on budgetary effects, costs, or revenue changes appears in the bill text or provided metadata.
Proponents' View#
The bill is titled the "Advancing Capital for Critical Energy Supply and Security Act" and the text states its purpose is "to modernize rules related to publicly traded partnerships." The sponsor listed is Representative Mike Carey. No additional sponsor statements or supporting analyses are included in the provided material.
Opponents' View#
No publicly available information on opposition or critiques appears in the bill text or provided metadata.