102 STAT. 3718	PUBLIC LAW 100-647—NOV. 10, 1988
"(iii) qualified fund defined.—For purposes of this
subparagraph, the term 'qualified fund* means any
partnership if—
"(I) at all times during the taxable year (and
during each preceding taxable year to which an
election under subclause (V) applied), such partner-
ship has at least 20 partners and no single partner
owns more than 20 percent of the interests in the
capital or profits of the partnership,
(II) the principal activity of such partnership
for such taxable year (and each such preceding
taxable year) consists of buying and selling options,
futures, or forwards with respect to commodities,
"(III) at least 90 percent of the gross income of
the partnership for the taxable year (and for each
such preceding taxable year) consisted of income or
gains described in subparagraph (A), (B), or (G) of
section 7704(dXl) or gain from the sale or disposi-
tion of capital assets held for the production of
interest or dividends,
"(IV) no more than a de minimis amount of the
gross income of the partnership for the taxable
year (and each such preceding taxable year) was
derived from buying and selling commodities, and
"(V) an election under this subclause applies to
the taxable year.
An election under subclause (V) for any taxable year
shall be made on or before the 1st day of such taxable
year (or, if later, on or before the 1st day during such
year on which the partnership holds an instrument
referred to in clause (i)). Any such election shall apply
to the taxable year for which made and all succeeding
taxable years unless revoked with the consent of the
Secretary.
"(iv) treatment of certain currency contracts.—
"(I) in general.—Except as provided in regula-
tions, in the case of a qualified fund, any bank
forward contract, any foreign currency futures con-
tract traded on a foreign exchange, or to the extent
provided in regulations any similar instrument,
which is not otherwise a section 1256 contract shall
be treated as a section 1256 contract for purposes
of section 1256.
"(II) GAINS AND LOSSES TREATED AS SHORT-TERM.—
In the case of any instrument treated as a section
1256 contract under subclause (I), subparagraph
(A) of section 1256(aX3) shall be applied by
substituting '100 percent' for '40 percent* (and
subparagraph (B) of such section shall not apply).
"(v) special rules for clause (iiiXD-—
"(I) certain general partners.—The interest of
a general partner in the partnership shall not be
treated as failing to meet the 20-percent ownership
requirements of clause (iiiXD for any taxable year
of the partnership if, for the taxable year of the
partner in which such partnership taxable year
ends, such partner (and each corporation filing a