1.904-5T—Look-through rules as applied to controlled foreign corporations and other entities (temporary).

(a) through (h)(2) [Reserved] For further guidance, see § 1.904-5(a) through (h)(2).
(3) Income from the sale of a partnership interest— (i) In general. To the extent a partner recognizes gain on the sale of a partnership interest, that income shall be treated as passive category income to the partner, unless the income is considered to be high-taxed under section 904(d)(2)(B)(iii)(II) and § 1.904-4(c).
(ii) Exception for 25-percent owned partnership. In the case of a sale of an interest in a partnership by a partner that is a 25-percent owner of the partnership under the principles of section 954(c)(4)(B), income recognized on the sale of the partnership interest shall be treated as general category income to the extent that such gain would not be classified as foreign personal holding company income under the look-through rule of section 954(c)(4).
(i) through (o)(2). [Reserved] For further guidance, see § 1.904-5(i) through (o)(2).
(3) Rules for income from the sale of a partnership interest— (i) Effective/applicability date. Paragraph (h)(3) of this section shall apply to taxable years of United States taxpayers beginning after December 31, 2006 and ending on or after December 21, 2007, and to taxable years of a foreign corporation which end with or within taxable years of its domestic corporate shareholder beginning after December 31, 2006 and ending on or after December 21, 2007.
(ii) Expiration date. The applicability of paragraph (h)(3) of this section expires on December 20, 2010.

Code of Federal Regulations

[T.D. 9260, 71 FR 24531, Apr. 25, 2006, as amended by T.D. 9368, 72 FR 72590, Dec. 21, 2007; T.D. 9452, 74 FR 27881, June 11, 2009]