SECTION 4. SALE OR EXCHANGE

BY AN APPLICABLE FINANCIAL INSTITUTION OF AN INTEREST IN CERTAIN PARTNERSHIPS

.01 Scope . This section applies if either all of the requirements in Paragraph (1) of this Subsection, or all of the requirements in Paragraph (2) of this Subsection, are satisfied.

(1) Sale or exchange on or after Jan- uary 1, 2008, and before September 7, 2008. (a) A partner (the taxpayer) sold or exchanged a partnership interest on or after January 1, 2008, and before September 7, 2008 (the Transaction); (b) The taxpayer was an applicable financial institution (or a Subsidiary described in Section 6.01(1)(b)–(d) of this revenue procedure) on the date of the Transaction; and

(c) At the time of the Transaction, at least 95 percent in value of the partnership’s assets consisted of QPS and cash or cash equivalents.

(2) Sale or exchange after September 6, 2008. (a) A partner (the taxpayer) sold or exchanged a partnership interest after September 6, 2008 (the Transaction);

(b) On September 6, 2008, and at all times thereafter through the date of the

Transaction, the taxpayer was an applicable financial institution (or a Subsidiary described in Section 6.01(2)(b)–(e) of this revenue procedure) and a partner in the partnership; and

(c) On September 6, 2008, and at all times thereafter through the date of the Transaction, at least 95 percent in value of the partnership’s assets consisted of QPS and cash or cash equivalents.

.02 Application . (1) Gain or loss on the Transaction is treated by EESA § 301 as ordinary income or loss. (Neither EESA § 301 nor this revenue procedure causes QPS to be described in section 751(c) or (d) of the Code.)

(2) Section 4.02(1) of this revenue procedure does not apply to the extent that there was an increase after September 6, 2008, in the taxpayer’s indirect interest in QPS, including as a result of—

(a) The taxpayer’s acquisition of additional partnership interests;

(b) Changes in the taxpayer’s interest in partnership income, loss or capital;

(c) The acquisition by the partnership of additional QPS; or

(d) Disproportionate distributions of other property or cash to other partners by the partnership.

(3) The limitation in Section 4.02(2)(a) of this revenue procedure does not apply to the extent the taxpayer acquired an additional partnership interest as transferred basis property within the meaning of section 7701(a)(43) of the Code from a person that—

(a) Held the partnership interest on September 6, 2008, and at all times thereafter until the transfer of the partnership interest to the taxpayer; and

(b) Was an applicable financial institution for this entire period.