102 STAT. 3440
PUBLIC LAW 100-647—NOV. 10, 1988 "(4) MAJORITY INTEREST TAXABLE YEAR; LIMITATION ON REQUIRED CHANGES.— "(A) MAJORITY INTEREST TAXABLE YEAR DEFINED.—For
purposes of paragraph (l)(B)(i)— "(i) IN GENERAL.—The term 'majority interest taxable year' means the taxable year (if any) which, on each testing day, constituted the taxable year of 1 or more partners having (on such day) an aggregate interest in partnership profits and capital of more than 50 percent, "(ii) TESTING DAYS.—The testing days shall be— "(I) the 1st day of the partnership taxable year (determined without regard to clause (i)), or "(11) the days during such representative period as the Secretary may prescribe. "(B) FURTHER CHANGE NOT REQUIRED FOR 3 YEARS.—
Except as provided in regulations necessary to prevent the avoidance of this section, if, by reason of paragraph (IXBXi), the taxable year of a partnership is changed, such partnership shall not be required to change to another taxable year for either of the 2 taxable years following the year of change." (2) Clause (iii) of section 706(b)(l)(B) of the 1986 Code is amended by striking out "or such other period as the Secretary may prescribe in regulations" and inserting in lieu thereof "unless the Secretary by regulations prescribes another period". (3) Section 706(b) of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(5) APPLICATION WITH OTHER SECTIONS.—Except as provided
in regulations, for purposes of determining the taxable year to which a partnership is required to change by reason of this subsection, changes in taxable years of other persons required by this subsection, section 441(i), section 584(h), section 645, or section 1378(a) shall be taken into account." (4) Paragraph (2) of section 441(i) of the 1986 Code (defining personal service corporation) is amended by adding at the end thereof the following: "A corporation shall not be treated as a personal service corporation unless more than 10 percent of the stock (by value) in such corporation is held by employee-owners (within the meaning of section 269A(b)(2), as modified by the preceding sentence). If a corporation is a member of an affiliated group filing a consolidated return, all members of such group shall be taken into account in determining whether such corporation is a personal service corporation." (5)(A) Section 584 of the 1986 Code (relating to common trust funds) is amended by adding at the end thereof the following new subsection: "(h) TAXABLE YEAR OF COMMON TRUST FUND.—For purposes of
this subtitle, the taxable year of any common trust fund shall be the calendar year." 26 USC 584 note. (B) The amendment made by subparagraph (A) shall take effect as if included in the amendments made by section 806 of the Reform Act, except that section 806(e)(l) shall be applied by substituting "December 31, 1987" for "December 31, 1986". For purposes of section 806(e)(2) of the Reform Act—
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