SECTION 4. APPLICATION

Automatic permission to aggregate qualified financial assets. Permission is hereby granted to any Qualified Partnership as defined in this revenue procedure to aggregate built-in gains and losses from qualified financial assets for purposes of making reverse section 704(c) allocations under § 1.704–3(e)(3). Pursuant to § 1.704–3(e)(3)(i), once a partnership adopts an aggregate approach under this revenue procedure, that partnership must apply the same aggregate approach to all of its qualified financial assets for all taxable years in which the partnership qualifies as a Qualified Partnership. However, a partnership may choose not to aggregate all of the partnership’s qualified financial assets provided that such qualified assets do not exceed in the aggregate 30 percent of the book value of the partnership’s non-cash assets at the time any such qualified financial assets is acquired.

Subsequent failure to qualify as a Qualified Partnership . A Qualified Partnership that adopts an aggregate approach under this revenue procedure and subsequently fails to qualify as a Qualified Partnership must make reverse section 704(c) allocations on an asset-by-asset basis after the date of disqualification. The partnership, however, is not required to disaggregate the book gain or book loss from qualified asset revaluations before the date of disqualification when making reverse section 704(c) allocations on or after the date of disqualification.