CLARIFICATION OF APPLICATION OF RETURN REQUIREMENT TO FOREIGN PARTNERSHIPS.

SEC. 1141. CLARIFICATION OF APPLICATION OF RETURN REQUIREMENT TO FOREIGN PARTNERSHIPS. (a) In General.—Section 6031 (relating to return of partnership income) is amended by adding at the end the following new subsection: “(e) Foreign Partnerships.— “(1) Exception for foreign partnership.—Except as provided in paragraph (2), the preceding provisions of this section shall not apply to a foreign partnership. “(2) Certain foreign partnerships required to file return.—Except as provided in regulations prescribed by the Secretary, this section shall apply to a foreign partnership for any taxable year if for such year, such partnership has— “(A) gross income derived from sources within the United States, or “(B) gross income which is effectively connected with the conduct of a trade or business within the United States.111 STAT. 981 The Secretary may provide simplified filing procedures for foreign partnerships to which this section applies.”. (b) Sanction for Failure by Foreign Partnership To Comply With Section 6031 To Include Denial of Deductions.—Subsection (f) of section 6231 is amended— (1) by striking “LOSSES and” in the heading and inserting “Deductions, Losses, and”, and (2) by striking “loss or” each place it appears and inserting “deduction, loss, or”. (c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.