Definitions and special rules

(A) Special rule for affiliated groups (i) In general All members of an expanded affiliated group shall be treated as a single corporation for purposes of this subsection. (ii) Partnerships owned by expanded affiliated groups For purposes of paragraph (3)(D), if all of the interests in the capital and profits of a partnership are owned by members of a single expanded affiliated group at all times during the taxable year of such partnership, the partnership and all members of such group shall be treated as a single taxpayer during such period. (iii) Expanded affiliated group For purposes of this subsection, the term “expanded affiliated group” means an affiliated group as defined in section 1504(a), determined— (I) by substituting “more than 50 percent” for “at least 80 percent” each place it appears, and (II) without regard to paragraphs (2) and (4) of section 1504(b). (iv) Allocation of deduction Except as provided in regulations, the deduction under paragraph (1) shall be allocated among the members of the expanded affiliated group in proportion to each member’s respective amount (if any) of qualified production activities income.

(B) Special rule for cooperative partners In the case of a specified agricultural or horticultural cooperative which is a partner in a partnership, rules similar to the rules of subsection (f)(1) shall apply for purposes of this subsection.

(C) Trade or business requirement This subsection shall be applied by only taking into account items which are attributable to the actual conduct of a trade or business.

(D) Unrelated business taxable income For purposes of determining the tax imposed by section 511, this section shall be applied by substituting “unrelated business taxable income” for “taxable income” each place it appears in this section (other than this subparagraph).

(E) Special rule for cooperative with oil related qualified production activities income (i) In general If a specified agricultural or horticultural cooperative has oil related qualified production activities income for any taxable year, the amount otherwise allowable as a deduction under paragraph (1) shall be reduced by 3 percent of the least of— (I) the oil related qualified production activities income of the cooperative for the taxable year, (II) the qualified production activities income of the cooperative for the taxable year, or (III) taxable income. (ii) Oil related qualified production activities income For purposes of this subparagraph, the term “oil related qualified production activities income” means for any taxable year the qualified production activities income which is attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof (within the meaning of section 927(a)(2)(C), as in effect before its repeal) during such taxable year.