(a) General rule
(1) Taxable income The taxable income of an electing large partnership shall be computed in the same manner as in the case of an individual except that
(A) the items described in section
772 (a) shall be separately stated, and
(B) the modifications of subsection (b) shall apply.
(2) Elections All elections affecting the computation of the taxable income of an electing large partnership or the computation of any credit of an electing large partnership shall be made by the partnership; except that the election under section
901, and any election under section
108, shall be made by each partner separately.
(3) Limitations, etc.
(A) In general
Except as provided in subparagraph (B), all limitations and other provisions affecting the computation of the taxable income of an electing large partnership or the computation of any credit of an electing large partnership shall be applied at the partnership level (and not at the partner level).
(B) Certain limitations applied at partner level The following provisions shall be applied at the partner level (and not at the partnership level):
(i) Section
68 (relating to overall limitation on itemized deductions).
(ii) Sections
49 and
465 (relating to at risk limitations).
(iii) Section
469 (relating to limitation on passive activity losses and credits).
(iv) Any other provision specified in regulations.
(4) Coordination with other provisions
Paragraphs (2) and (3) shall apply notwithstanding any other provision of this chapter other than this part.
(b) Modifications to determination of taxable income In determining the taxable income of an electing large partnership
(1) Certain deductions not allowed The following deductions shall not be allowed:
(A) The deduction for personal exemptions provided in section
151.
(B) The net operating loss deduction provided in section
172.
(C) The additional itemized deductions for individuals provided in part VII of subchapter B (other than section
212 thereof).
(2) Charitable deductions In determining the amount allowable under section
170, the limitation of section
170 (b)(2) shall apply.
(3) Coordination with section 67 In lieu of applying section
67,
70 percent of the amount of the miscellaneous itemized deductions shall be disallowed.
(c) Special rules for income from discharge of indebtedness If an electing large partnership has income from the discharge of any indebtedness
(1) such income shall be excluded in determining the amounts referred to in section
772 (a), and
(2) in determining the income tax of any partner of such partnership
(A) such income shall be treated as an item required to be separately taken into account under section
772 (a), and
(B) the provisions of section
108 shall be applied without regard to this part.
