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131 STAT. 2118 PUBLIC LAW 115–97—DEC. 22, 2017 ‘‘(II) shall be increased by such partner’s distributive share of such partnership’s excess tax- able income. For purposes of clause (ii)(II), a partner’s distributive share of partnership excess taxable income shall be determined in the same manner as the partner’s distributive share of nonseparately stated taxable income or loss of the partnership. ‘‘(B) SPECIAL RULES FOR CARRYFORWARDS.— ‘‘(i) IN GENERAL.—The amount of any business interest not allowed as a deduction to a partnership for any taxable year by reason of paragraph (1) for any taxable year— ‘‘(I) shall not be treated under paragraph (2) as business interest paid or accrued by the partner- ship in the succeeding taxable year, and ‘‘(II) shall, subject to clause (ii), be treated as excess business interest which is allocated to each partner in the same manner as the non- separately stated taxable income or loss of the partnership. ‘‘(ii) TREATMENT OF EXCESS BUSINESS INTEREST ALLOCATED TO PARTNERS.—If a partner is allocated any excess business interest from a partnership under clause (i) for any taxable year— ‘‘(I) such excess business interest shall be treated as business interest paid or accrued by the partner in the next succeeding taxable year in which the partner is allocated excess taxable income from such partnership, but only to the extent of such excess taxable income, and ‘‘(II) any portion of such excess business interest remaining after the application of sub- clause (I) shall, subject to the limitations of sub- clause (I), be treated as business interest paid or accrued in succeeding taxable years. For purposes of applying this paragraph, excess taxable income allocated to a partner from a partnership for any taxable year shall not be taken into account under paragraph (1)(A) with respect to any business interest other than excess business interest from the partner- ship until all such excess business interest for such taxable year and all preceding taxable years has been treated as paid or accrued under clause (ii). ‘‘(iii) BASIS ADJUSTMENTS.— ‘‘(I) IN GENERAL.—The adjusted basis of a partner in a partnership interest shall be reduced (but not below zero) by the amount of excess busi- ness interest allocated to the partner under clause (i)(II). ‘‘(II) SPECIAL RULE FOR DISPOSITIONS.—If a partner disposes of a partnership interest, the adjusted basis of the partner in the partnership interest shall be increased immediately before the disposition by the amount of the excess (if any) of the amount of the basis reduction under sub- clause (I) over the portion of any excess business VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00066 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS