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131 STAT. 2139 PUBLIC LAW 115–97—DEC. 22, 2017 ‘‘(B) AMOUNT TREATED AS EFFECTIVELY CONNECTED.— The amount determined under this subparagraph with respect to any partnership interest sold or exchanged— ‘‘(i) in the case of any gain on the sale or exchange of the partnership interest, is— ‘‘(I) the portion of the partner’s distributive share of the amount of gain which would have been effectively connected with the conduct of a trade or business within the United States if the partnership had sold all of its assets at their fair market value as of the date of the sale or exchange of such interest, or ‘‘(II) zero if no gain on such deemed sale would have been so effectively connected, and ‘‘(ii) in the case of any loss on the sale or exchange of the partnership interest, is— ‘‘(I) the portion of the partner’s distributive share of the amount of loss on the deemed sale described in clause (i)(I) which would have been so effectively connected, or ‘‘(II) zero if no loss on such deemed sale would be have been so effectively connected. For purposes of this subparagraph, a partner’s distribu- tive share of gain or loss on the deemed sale shall be determined in the same manner as such partner’s distributive share of the non-separately stated taxable income or loss of such partnership. ‘‘(C) COORDINATION WITH UNITED STATES REAL PROP- ERTY INTERESTS.—If a partnership described in subpara- graph (A) holds any United States real property interest (as defined in section 897(c)) at the time of the sale or exchange of the partnership interest, then the gain or loss treated as effectively connected income under subpara- graph (A) shall be reduced by the amount so treated with respect to such United States real property interest under section 897. ‘‘(D) SALE OR EXCHANGE.—For purposes of this para- graph, the term ‘sale or exchange’ means any sale, exchange, or other disposition. ‘‘(E) SECRETARIAL AUTHORITY.—The Secretary shall prescribe such regulations or other guidance as the Sec- retary determines appropriate for the application of this paragraph, including with respect to exchanges described in section 332, 351, 354, 355, 356, or 361.’’. (2) CONFORMING AMENDMENTS.—Section 864(c)(1) is amended— (A) by striking ‘‘and (7)’’ in subparagraph (A), and inserting ‘‘(7), and (8)’’, and (B) by striking ‘‘or (7)’’ in subparagraph (B), and inserting ‘‘(7), or (8)’’. (b) WITHHOLDING REQUIREMENTS.—Section 1446 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following: ‘‘(f) SPECIAL RULES FOR WITHHOLDING ON DISPOSITIONS OF PARTNERSHIP INTERESTS.— ‘‘(1) IN GENERAL.—Except as provided in this subsection, if any portion of the gain (if any) on any disposition of an 26 USC 864. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00087 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS