PUBLIC LAW 109–135—DEC. 21, 2005
119 STAT. 2617
‘‘(D) PARTNERSHIPS OWNED BY EXPANDED AFFILIATED GROUPS.—For purposes of this paragraph, 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.’’. (8) Paragraph (1) of section 199(d) is amended to read as follows: ‘‘(1) APPLICATION OF SECTION TO PASS-THRU ENTITIES.— ‘‘(A) PARTNERSHIPS AND S CORPORATIONS.—In the case of a partnership or S corporation— ‘‘(i) this section shall be applied at the partner or shareholder level, ‘‘(ii) each partner or shareholder shall take into account such person’s allocable share of each item described in subparagraph (A) or (B) of subsection (c)(1) (determined without regard to whether the items described in such subparagraph (A) exceed the items described in such subparagraph (B)), and ‘‘(iii) each partner or shareholder shall be treated for purposes of subsection (b) as having W–2 wages for the taxable year in an amount equal to the lesser of— ‘‘(I) such person’s allocable share of the W– 2 wages of the partnership or S corporation for the taxable year (as determined under regulations prescribed by the Secretary), or ‘‘(II) 2 times 9 percent of so much of such person’s qualified production activities income as is attributable to items allocated under clause (ii) for the taxable year. ‘‘(B) TRUSTS AND ESTATES.—In the case of a trust or estate— ‘‘(i) the items referred to in subparagraph (A)(ii) (as determined therein) and the W–2 wages of the trust or estate for the taxable year, shall be apportioned between the beneficiaries and the fiduciary (and among the beneficiaries) under regulations prescribed by the Secretary, and ‘‘(ii) for purposes of paragraph (2), adjusted gross income of the trust or estate shall be determined as provided in section 67(e) with the adjustments described in such paragraph. ‘‘(C) REGULATIONS.—The Secretary may prescribe rules requiring or restricting the allocation of items and wages under this paragraph and may prescribe such reporting requirements as the Secretary determines appropriate.’’. (9) Paragraph (3) of section 199(d) is amended to read as follows: ‘‘(3) AGRICULTURAL AND HORTICULTURAL COOPERATIVES.— ‘‘(A) DEDUCTION ALLOWED TO PATRONS.—Any person who receives a qualified payment from a specified agricultural or horticultural cooperative shall be allowed for the taxable year in which such payment is received a deduction under subsection (a) equal to the portion of the deduction
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