# Prop. Treas. Reg. § 1.56A-5: AFSI adjustments to partner's distributive share of partnership AFSI. Proposed regulation, not in force. REG-112129-23, 89 FR 75062, published 2024-09-13 . Interprets 26 U.S.C. § 56A. Par. 9. Sections 1.56A-0 through 1.56A-27 are added to read as follows: (a) Overview. This section provides rules under section 56A(c)(2)(D) of the Code for determining a CAMT entity's AFSI adjustment for its distributive share of AFSI with respect to a partnership investment (that is, a CAMT entity's interest in a partnership). Paragraph (b) of this section provides the general rule regarding adjustments to a CAMT entity's AFSI with respect to its partnership investment. Paragraph (c) of this section describes the applicable method used to adjust a CAMT entity's AFSI with respect to its partnership investment. Paragraph (d) of this section provides rules regarding items reflected in a CAMT entity's FSI with respect to a partnership investment that are not disregarded for AFSI purposes under the applicable method. Paragraph (e) of this section describes how a distributive share amount is determined under the applicable method. Paragraph (f) of this section describes how the applicable method is applied in tiered partnerships. Paragraph (g) of this section provides rules for determining the taxable year in which the CAMT entity includes the distributive share amount in AFSI if the CAMT entity and the partnership have different taxable years. Paragraph (h) of this section describes reporting and filing requirements for a CAMT entity that is a partner in a partnership. Paragraph (i) of this section lists reporting and filing requirements for partnerships with CAMT entities as partners. Paragraph (j) of this section provides rules limiting the use of a CAMT entity's distributive share amount. Paragraph (k) of this section provides examples illustrating the application of the rules in this section. Paragraph (l) of this section provides the applicability date of this section. (b) In general. If a CAMT entity is a partner in a partnership, the CAMT entity's AFSI with respect to its partnership investment is adjusted as required under the applicable method described in paragraph (c) of this section and the rules in § 1.56A-20, regardless of the method the CAMT entity uses to account for its partnership investment for AFS purposes. (c) Applicable method. Under the applicable method, a CAMT entity's AFSI with respect to its partnership investment— (1) First, except for the amounts described in paragraph (d) of this section, is adjusted to disregard any amount the CAMT entity reflects in its FSI with respect to its partnership investment for the taxable year (for example, changes in the fair value of the partnership investment that are reflected in the CAMT entity's FSI under the fair value method, or the CAMT entity's share of the partnership's earnings that are reflected in the CAMT entity's FSI under the equity method); (2) Second, is adjusted to include the CAMT entity's distributive share amount for the taxable year as computed under paragraph (e) of this section (except for paragraph (e)(5) of this section), taking into account paragraphs (f), (g) and (j) of this section; and (3) Third, to the extent applicable, is adjusted as required under paragraph (e)(5) of this section. (d) FSI amounts with respect to a partnership investment that are not disregarded under paragraph (c)(1) of this section. For purposes of paragraph (c)(1) of this section, a CAMT entity's AFSI with respect to its partnership investment is not adjusted to disregard any FSI amounts attributable to a transfer, sale or exchange, contribution, distribution, dilution, deconsolidation, change in ownership, or any other transaction between any partners (including the CAMT entity) of a partnership and the partnership, or between any partners of the partnership (including the CAMT entity), that are not derived from, and included in, the partnership's FSI. However, these FSI amounts may be subject to modification or redetermination for AFSI purposes under §§ 1.56A-1(d)(4) and 1.56A-20. (e) Distributive share amount —(1) In general. Except as provided in paragraph (e)(6) of this section, for purposes of this section, the distributive share amount of a CAMT entity that is a partner in a partnership is computed by— (i) The CAMT entity determining its distributive share percentage in accordance with paragraph (e)(2) of this section; (ii) The partnership determining its modified FSI in accordance with paragraph (e)(3) of this section; (iii) The CAMT entity multiplying its distributive share percentage by the modified FSI of the partnership; and (iv) The CAMT entity adjusting the amount determined under paragraph (e)(1)(iii) of this section in accordance with paragraph (e)(4)(ii) of this section. (2) Computing the distributive share percentage. The distributive share percentage is a fraction, the numerator of which is the FSI amount that is disregarded by a CAMT entity under paragraph (c)(1) of this section, redetermined based on the partnership's taxable year if the taxable year of the partnership and the CAMT entity are different, and the denominator of which is: (i) In the case of a CAMT entity, other than a CAMT entity described in paragraph (e)(2)(ii), (iii), (iv) or (v) of this section, and a partnership that are members of the same financial statement group, or in the case of a CAMT entity that uses the equity method to account for its partnership investment, 100 percent of the partnership's FSI for the partnership's taxable year. (ii) In the case of a CAMT entity that uses the fair value method to account for its partnership investment, the total change in the fair value of the partnership during the partnership's taxable year, as determined by the CAMT entity for purposes of determining the CAMT entity's share of the total change in its AFS. (iii) In the case of a CAMT entity that treats its partnership investment as other than an equity investment for AFS purposes (for example, as debt) (AFS non-partner), 100 percent of the partnership's FSI for the partnership's taxable year plus the FSI amount included in the numerator for the CAMT entity under this paragraph (e)(2) for the taxable year. (iv) In the case of a CAMT entity that treats itself as owning 100 percent of the equity in the partnership for AFS purposes because the CAMT entity treats all other partners in the partnership as AFS non-partners, 100 percent of the partnership's FSI for the partnership's taxable year plus the sum of any amounts reflected in the partnership's FSI that are treated as paid or accrued to the other partners for the partnership's taxable year. (v) In the case of a CAMT entity that uses any other AFS method to account for its partnership investment, an amount determined under the principles of paragraphs (e)(2)(i) and (ii) of this section that is reasonable under the facts and circumstances and reflective of the proportionate amount of the partnership's FSI the CAMT entity is reporting for AFS purposes. (3) Computing the modified FSI of the partnership. A partnership's modified FSI is equal to the partnership's FSI for the partnership's taxable year, adjusted for all relevant AFSI adjustments provided in the section 56A regulations (that is, those AFSI adjustments that can apply to partnerships), except for the AFSI adjustments in §§ 1.56A-4(c)(1)(ii), 1.56A-15(d)(2)(ii) and (iv), and 1.56A-16(d)(2)(ii) and (iv). For purposes of determining a partnership's modified FSI, references to AFSI in other sections of the section 56A regulations (except for the references to AFSI in § 1.56A-1(b)(1)) are treated as references to modified FSI. (4) AFSI items that are separately stated —(i) In general. The AFSI items described in §§ 1.56A-4(c)(1)(ii), 1.56A-6(c)(2)(iii), 1.56A-8(c), 1.56A-15(d)(2)(ii) and (iv), and (e)(3)(iii) and (iv), 1.56A-16(d)(2)(ii) and (iv), and (e)(3)(iii) and (iv), 1.56A-20(d)(1)(ii), and 1.56A-21(e)(2)(iii) are separately stated to the partners in the partnership that are CAMT entities (CAMT entity partners) and taken into account by the CAMT entity partners in the manner provided in paragraphs (e)(4)(ii) and (iii) of this section, as applicable. (ii) Adjustments to a partner's distributive share amount. The following separately stated AFSI items are taken into account as adjustments to a CAMT entity partner's distributive share amount of a partnership's modified FSI as provided in paragraph (e)(1)(iv) of this section: (A) A CAMT entity partner's distributive share of the AFSI items described in §§ 1.56A-15(d)(2)(ii) and (iv) and 1.56A-16(d)(2)(ii) and (iv), which is equal to the CAMT entity partner's distributive share of the items for regular tax purposes for the taxable year; (B) A CAMT entity partner's distributive share of the AFSI items described in §§ 1.56A-15(e)(3)(iii) and (iv) and 1.56A-16(e)(3)(iii) and (iv), as provided under §§ 1.56A-15(e)(3)(iii) and (iv) and 1.56A-16(e)(3)(iii) and (iv); and (C) A CAMT entity partner's distributive share of the AFSI items described in § 1.56A-20(d)(1)(ii), which is equal to the CAMT entity partner's allocable share of the items as provided in § 1.56A-20(d)(2)(i) for the taxable year, taking into account any acceleration event described in § 1.56A-20(d)(1)(iii) and (d)(2)(ii). (iii) Adjustments to a partner's AFSI. The separately stated AFSI items described in §§ 1.56A-4(c)(1)(ii), 1.56A-6(c)(2)(iii), 1.56A-8(c), and 1.56A-21(e)(2)(iii) are not taken into account in determining a CAMT entity partner's distributive share amount, and instead are taken into account in determining a CAMT entity partner's AFSI as follows: (A) The CAMT entity partner takes into account the AFSI items described in § 1.56A-4(c)(1)(ii) that are separately stated to the CAMT entity partner, as provided under § 1.56A-4(e); (B) The CAMT entity partner takes into account the AFSI items described in § 1.56A-6(c)(2)(iii) that are separately stated to the CAMT entity partner, as provided under § 1.56A-6(c)(2)(iv); (C) The CAMT entity partner takes into account the AFSI items described in § 1.56A-8(c) that are separately stated to the CAMT entity partner, as provided under § 1.56A-8(c); and (D) The CAMT entity partner takes into account the AFSI item described in § 1.56A-21(e)(2)(iii) that is separately stated to the CAMT entity partner, as provided under § 1.56A-21(e)(2)(ii). (5) Effect of equity method basis adjustments to a CAMT entity's FSI. If a CAMT entity partner includes in its FSI any amortization of an equity method basis adjustment with respect to the partnership investment that is attributable to section 168 property or qualified wireless spectrum held by the partnership, and if the CAMT entity partner has a basis adjustment under section 743(b) of the Code with respect to the same property that affects the CAMT entity partner's distributive share amount, then the CAMT entity partner adjusts its AFSI to disregard any such FSI amortization. (6) Computing a partner's distributive share amount when the partnership's AFS is its Federal income tax return— (i) In general. If a partnership treats as its AFS the partnership's Federal income tax return under § 1.56A-2(c)(6), a CAMT entity partner's distributive share amount with respect to the partnership for a taxable year is equal to the amount of the CAMT entity partner's FSI that the partner disregards under paragraph (c)(1) of this section for the taxable year (except for any items described in §§ 1.56A-4(c)(1)(i) and 1.56A-8(b) that would otherwise be reflected in such amount). (ii) Separately stated AFSI items. If a CAMT entity partner determines its distributive share amount in accordance with paragraph (e)(6)(i) of this section, paragraphs (e)(4)(iii)(A) through (C) of this section apply to determine the CAMT entity partner's AFSI, but paragraph (e)(4)(iii)(D) of this section does not apply. (f) Computation in the case of tiered partnerships. If a CAMT entity is a partner in a partnership (UTP) that directly or indirectly owns an investment in a lower-tier partnership (LTP), each partnership, starting with the lowest-tier partnership and going in order up the tiered-partnership chain, applies the rules and principles of paragraphs (b) through (e) of this section to determine the distributive share amounts of each CAMT entity partner in the tiered-partnership chain. (g) Taxable year. The distributive share amount that is required to be included in a CAMT entity's AFSI for a taxable year of the CAMT entity under paragraph (c)(2) of this section with respect to the CAMT entity's partnership investment is based on the modified FSI of the partnership for any taxable year of the partnership ending with or within the taxable year of the CAMT entity. (h) Reporting and filing requirements for a CAMT entity that is a partner in a partnership —(1) In general. If a CAMT entity is a partner in a partnership, and if the CAMT entity cannot determine its distributive share of the partnership's AFSI without receiving certain information from the partnership, the CAMT entity must request such information from that partnership by the 30th day after the close of the taxable year of the partnership to which the information request relates, except as provided in paragraph (i)(2)(iii) of this section. The CAMT entity must maintain the information, and requests made for the information, in its books and records. After the first taxable year in which the CAMT entity requests information from the partnership, the partnership must continue to provide the information to the CAMT entity each subsequent taxable year of the partnership unless the partnership receives written notification from the CAMT entity that the information is not required. (2) Failure to obtain information —(i) In general. If a partnership fails to furnish the information requested by a CAMT entity that is a partner in the partnership under paragraph (h)(1) of this section, the CAMT entity must determine its distributive share amount with respect to the partnership investment by making a required good-faith estimate in accordance with paragraph (h)(2)(ii) of this section. (ii) Required estimate. If a CAMT entity is required to estimate its distributive share amount under paragraph (h)(2)(i) of this section with respect to a partnership investment, it must base its estimate on whatever information it can reasonably obtain, if received before the expiration of the period of limitations under section 6501 of the Code, and it must continue to use its best efforts to obtain the requested information from the partnership. Except as provided in paragraph (h)(2)(iii)(B) of this section, once the CAMT entity receives the information from the partnership, the CAMT entity (if not also an applicable corporation) should report the information to its partners, including any UTP (which would then report the information to its partners), until the information is received by an applicable corporation. A partnership that fails to furnish the required information may be subject to penalties and adjustment in accordance with paragraph (i)(6) of this section. (iii) Partnerships subject to subchapter C of chapter 63 of the Code— (A) Required estimate. If a partnership is subject to the centralized partnership audit regime in subchapter C of chapter 63 of the Code (BBA partnership), a CAMT entity that is a partner in the partnership must file a notice of inconsistent treatment in accordance with section 6222 of the Code if making the required estimate requires the CAMT entity to treat a partnership-related item, as defined in § 301.6241-1(a)(6)(ii) of this chapter, inconsistently with how the partnership treated the partnership-related item on its partnership return. (B) Information obtained after the filing of the partnership return. If a BBA partnership previously filed its partnership return for the taxable year, and if the due date for filing the partnership return has passed, the BBA partnership must file an administrative adjustment request (AAR) in accordance with section 6227 of the Code in order to adjust any partnership-related items, including as part of furnishing information to a CAMT entity that is a partner in a partnership. Any such adjustment is determined and taken into account in accordance with section 6227 and the regulations. (i) Reporting and filing requirements for partnerships in which a CAMT entity is a partner— (1) Requirement to file information with the IRS and to furnish information to a CAMT entity. If a CAMT entity that is a partner in a partnership requests information from the partnership in accordance with paragraph (h) of this section, the partnership must file such information with the IRS as the Commissioner may require in forms, instructions, or other guidance for the Commissioner to determine that the partnership and its partners have complied with the rules of this section. The partnership also must furnish the information to the CAMT entity in such manner as the Commissioner may require in forms, instructions, or other guidance. This information includes— (i) Information necessary to determine the denominator for the distributive share percentage under paragraph (e)(2) of this section; (ii) The partnership's modified FSI as determined under paragraph (e)(3) of this section; (iii) Information required for the CAMT entity to make the adjustments provided in paragraph (e)(4) of this section; (iv) If the CAMT entity is a United States shareholder, information required for the CAMT entity to make the adjustments provided in § 1.56A-6(b); and (v) If the CAMT entity is a controlled foreign corporation, information required for the United States shareholders of the controlled foreign corporation to make the adjustments provided in § 1.56A-6(b). (2) Special rules for tiered structures —(i) Requirement to request information. If a UTP requires information from an LTP to meet the UTP's reporting and filing requirements under this section (including any information required to be furnished under paragraph (i)(1) of this section to a CAMT entity that is a partner in UTP), the UTP must request the information from the LTP. (ii) Requirement to furnish and file information. If information is requested from an LTP under paragraph (i)(2)(i) of this section, the LTP must file the information with the IRS and must furnish the information to the UTP as required under paragraph (i)(1) of this section. (iii) Timing of requesting information. A UTP described in paragraph (i)(2)(i) of this section must request any necessary information by the later of— (A) The 30th day after the close of the taxable year of the partnership to which the information request relates; or (B) 14 days after the date the UTP receives a request for the information from another UTP. (3) Timing of furnishing information —(i) In general. Except as provided in paragraph (i)(3)(ii) of this section, requested information must be furnished by the date on which the partnership is required to furnish information under section 6031(b) of the Code. (ii) Late requests. Except as provided in paragraph (h)(2)(iii)(B) of this section, information with respect to a taxable year that is requested by a UTP after the date that is 14 days prior to the due date for an LTP to furnish and file information under section 6031(b) must be furnished and filed in the time and manner prescribed by forms, instructions, or other guidance. (iii) Partnership not required to furnish information to a CAMT entity until it has notice of a request. A partnership is not required to furnish information to a CAMT entity that is a partner in the partnership under this paragraph (i)(3)(iii) until it has notice of a request. For purposes of this paragraph (i)(3)(iii), a partnership has notice of a request when— (A) The partnership has received a request in the manner described in paragraph (h)(1) of this section from the CAMT entity; or (B) The partnership has an obligation to continue providing information to a CAMT entity partner under paragraph (h)(1) of this section due to a request made by the CAMT entity in a prior taxable year. (4) Manner of furnishing information. Information may be furnished in any written manner, including electronically, that is agreed to by the parties. (5) Recordkeeping requirement. Any partnership receiving a request for information must retain a copy of the request and calculations related to distributive share amounts, and the date the request was received, in its books and records. (6) Penalties. The information required to be furnished under this paragraph (i) also is required to be furnished under section 6031(b). See also section 6722 of the Code. (j) Limitation on allowance of negative distributive share amount —(1) In general. If a CAMT entity's distributive share amount (as determined under paragraph (e) of this section) with respect to a partnership investment is negative for a taxable year, the CAMT entity includes the negative distributive share amount in its AFSI for the taxable year only to the extent the negative distributive share amount does not exceed the CAMT entity's CAMT basis in its partnership investment (as determined under paragraph (j)(3) of this section) at the end of the partnership taxable year in which the negative distributive share amount occurred. Ordering rules similar to the rules in § 1.704-1(d)(2) apply in computing a CAMT entity's CAMT basis in its partnership investment for purposes of applying the rules in this section. (2) Carryover of suspended negative distributive share amount. Any negative distributive share amount that is not allowed for a taxable year under paragraph (j)(1) of this section is included in determining the CAMT entity's distributive share amount (as determined under paragraph (e) of this section) in the succeeding taxable year, subject to the limitation provided in paragraph (j)(1) of this section. (3) CAMT basis in a partnership investment. For purposes of the section 56A regulations, a CAMT entity's CAMT basis in its partnership investment is equal to the CAMT entity's AFS basis in the partnership investment as of the first day of the partnership's first taxable year ending after December 31, 2019, in which the CAMT entity held its interest in the partnership, adjusted for the following items for each taxable year of the partnership ending after December 31, 2019 (but not adjusted below zero), as applicable— (i) Include any amounts reflected in the AFS basis of the CAMT entity's partnership investment that are not derived from, and included in, the partnership's FSI (for example, amounts described in paragraph (d) of this section); (ii) Increase by the CAMT entity's distributive share amount included in its AFSI, if the distributive share amount is positive; (iii) Decrease by the CAMT entity's distributive share amount included in its AFSI, if the distributive share amount is negative; (iv) Increase or decrease, as appropriate, to take into account the treatment of contributions of property by the CAMT entity under § 1.56A-20(c)(3)(ii); (v) Increase or decrease, as appropriate, to take into account any adjustments that are separately stated under paragraph (e)(4)(iii) of this section and made to the basis in the CAMT entity's partnership investment for regular tax purposes under section 705 of the Code; (vi) Decrease to take into account any adjustments made to the basis in the CAMT entity's partnership investment for regular tax purposes under § 1.1017-1(g)(2) in accordance with § 1.56A-21(e); (vii) Increase or decrease, as appropriate, to take into account any adjustments made to the basis in the CAMT entity's partnership investment for regular tax purposes under section 961(a) or (b) of the Code; (viii) Decrease to take into account any adjustments made to the basis in the CAMT entity's partnership investment for regular tax purposes under section 50(c)(5) of the Code; (ix) Exclude any FSI amortization disallowed in the calculation of the CAMT entity's AFSI under paragraph (e)(5) of this section; (x) Increase to take into account any adjustments described in § 1.56A-21(e) that are separately stated to the CAMT entity under paragraph (e)(4)(iii) of this section; (xi) Exclude any amounts that are included in the AFS basis of the CAMT entity's partnership investment as a result of a contribution of stock of a foreign corporation and increase to take into account any adjustments made to the basis in the CAMT entity's partnership investment for regular tax purposes under section 722 of the Code resulting from a contribution of stock of a foreign corporation; and (xii) Include any amounts that are excluded from the AFS basis of the CAMT entity's partnership investment as a result of a non-liquidating distribution of stock of a foreign corporation and decrease to take into account any adjustments made to the basis of the CAMT entity's partnership investment for regular tax purposes under section 733 of the Code resulting from a non-liquidating distribution of stock of a foreign corporation. (k) Examples. The following examples illustrate the application of the rules in this section. (1) Example 1: Adjustment of AFSI with respect to a partnership investment accounted for using the equity method— (i) Facts. PRS1 is a partnership, X is a corporation, and A is an individual. PRS1 is owned by X and A. PRS1 and X have the same tax and AFS years, and both use the calendar year as its taxable year and for AFS purposes. For 2024, X has FSI of $250x, consisting of $200x from its direct operations and $50x from its investment in PRS1, which it accounts for under the equity method. Also, for 2024, PRS1 has $100x of FSI which includes $20x of income from a covered benefit plan and $10x of covered book depreciation expense, as defined in § 1.56A-15(b)(3). For regular tax purposes, the $20x of income from the covered benefit plan is excludable from gross income and the $10x of covered book depreciation expense is equal to deductible tax depreciation, as defined in § 1.56A-15(b)(5), with respect to section 168 property. Under the equity method, X includes 50% of PRS1's FSI for 2024 on its AFS. (ii) Analysis. The following steps are used to compute X's distributive share amount from PRS1 for 2024: (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year. Under paragraph (c)(1) of this section, X disregards the $50x of FSI it includes on its AFS with respect to its investment in PRS1 for 2024. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(i) of this section, X must compute a fraction, the numerator of which is $50x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $100x (100% of PRS1's FSI for 2024). The resulting distributive share percentage is 50% ($50x/$100x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS1's FSI of $100x must be adjusted under § 1.56A-13(b) to disregard the $20x of income from the covered benefit plan within the meaning § 1.56A-13(c)(1) that was included for AFS purposes, and to include none of the gross income from the covered benefit plan since it was all excluded from gross income for regular tax purposes. PRS1's FSI must also be adjusted to disregard the covered book depreciation expense, or $10x, under § 1.56A-15(d)(1)(iii), and reduced by the deductible tax depreciation, or $10x, under § 1.56A-15(d)(1)(ii). Accordingly, PRS1's modified FSI is $80x ($100x − $20x + $10x − $10x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, X must multiply its distributive share percentage (50%) by the modified FSI of PRS1, or $80x, resulting in $40x of modified FSI for X. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, X must adjust its share of PRS1's modified FSI by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, X's distributive share amount of PRS1's AFSI for 2024 is $40x. (F) Step 6: Include distributive share amount in AFSI. Under paragraph (c)(2) of this section, X includes in its AFSI the $40x distributive share amount from PRS1. Thus, after reducing X's AFSI from $250x to $200x ( Step 1 ), it is increased to $240x for 2024. (2) Example 2: Adjustment of AFSI with respect to a partnership investment accounted for using the hypothetical liquidation at book value under the equity method— (i) Facts. PRS1 is a partnership, X is a corporation, and A is an individual. PRS1 is owned by X and A. PRS1 and X have the same tax and AFS years. For 2024, X has FSI of $250x, consisting of $190x from its direct operations and $60x from its investment in PRS1, which it accounts for under the hypothetical liquidation at book value method under the equity method. Also, for 2024, PRS1 has $100x of FSI which includes $20x of income from a covered benefit plan and $10x of covered book depreciation expense, as defined in § 1.56A-15(b)(3). For regular tax purposes, the $20x of income from the covered benefit plan is excludable from gross income and the $10x of covered book depreciation expense is equal to deductible tax depreciation, as defined in § 1.56A-15(b)(5), with respect to section 168 property. (ii) Analysis. The following steps are used to compute X's distributive share amount from PRS1 for 2024: (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year. Under paragraph (c)(1) of this section, X disregards the $60x of FSI it includes on its AFS with respect to its investment in PRS1 for 2024. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(i) of this section, X must compute a fraction, the numerator of which is $60x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $100x (100% of PRS1's FSI for 2024). The resulting distributive share percentage is 60% ($60x/$100x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS1's FSI of $100x must be adjusted under § 1.56A-13(b) to disregard the $20x of income from the covered benefit plan within the meaning § 1.56A-13(c)(1) that was included for AFS purposes, and to include none of the gross income from the covered benefit plan since it was all excluded from gross income for regular tax purposes. PRS1's FSI must also be adjusted to disregard the covered book depreciation expense, or $10x, under § 1.56A-15(d)(1)(iii) and reduced by the deductible tax depreciation, or $10x, under § 1.56A-15(d)(1)(ii). Accordingly, PRS1's modified FSI is $80x ($100x − $20x + $10x − $10x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, X must multiply its distributive share percentage (60%) by the modified FSI of PRS1, or $80x, resulting in $48x of modified FSI for X. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, X must adjust its share of PRS1's modified FSI by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, X's distributive share amount of PRS1's AFSI for 2024 is $48x. (F) Step 6: Include distributive share amount in AFSI. Under paragraph (c)(2) of this section, X includes in its AFSI the $48x distributive share amount from PRS1. Thus, after reducing X's AFSI from $250x to $190x ( Step 1 ), it is increased to $238x for 2024. (3) Example 3: Adjustment of AFSI with respect to a partnership investment accounted for using the hypothetical liquidation at book value under the equity method and involving a loss on the investment— (i) Facts. PRS1 is owned by X, a corporation and a tax-equity investor in PRS, and A, an individual developer. For 2024, X has FSI of $50x, consisting of $200x of income from its direct operations and $150x of loss from its investment in PRS1, which it accounts for under the hypothetical liquidation at book value method under the equity method. Also, for 2024, PRS1 has −$100x of FSI which includes $20x of income from a covered benefit plan and $10x of covered book depreciation expense, as defined in § 1.56A-15(b)(3). For regular tax purposes, the $20x of income from the covered benefit plan is excludable from gross income and the $10x of covered book depreciation expense is deductible tax depreciation, as defined in § 1.56A-15(b)(5), with respect to section 168 property. (ii) Analysis. The following steps are used to compute X's distributive share amount from PRS1 for 2024: (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year. Under paragraph (c)(1) of this section, X disregards the −$150x of FSI it includes on its AFS with respect to its investment in PRS1 for 2024. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(i) of this section, X must compute a fraction, the numerator of which is −$150x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is −$100x (100% of PRS1's FSI for 2024). The resulting distributive share percentage is 150% (−$150x/−$100x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS1's FSI of −$100x must be adjusted under § 1.56A-13(b) to disregard the $20x of income from the covered benefit plan within the meaning § 1.56A-13(c)(1) that was included for AFS purposes, and to include none of the gross income from the covered benefit plan since it was all excluded from gross income for regular tax purposes. PRS1's FSI must also be adjusted to disregard the covered book depreciation expense, or $10x, under § 1.56A-15(d)(1)(iii) and reduced by the deductible tax depreciation, or $10x, under § 1.56A-15(d)(1)(ii). Accordingly, PRS1's modified FSI is −$120x (−$100x − $20x + $10x − $10x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, X must multiply its distributive share percentage (150%) by the modified FSI of PRS1, or −$120x, resulting in −$180x of modified FSI for X. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, X must adjust its share of PRS1's modified FSI by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, X's distributive share amount of PRS1's AFSI for 2024 is −$180x. (F) Step 6: Include distributive share amount in AFSI. Under paragraph (c)(2) of this section, X includes in its AFSI the −$180x distributive share amount from PRS1 (subject to the rules in paragraph (j)(1) of this section). Thus, after increasing X's AFSI from $50x to $200x ( Step 1 ), it is decreased to $20x for 2024. (4) Example 4: Determining distributive share percentage for AFS non-partner— (i) Facts. PRS1 is treated as a partnership for Federal income tax purposes owned by X and Y, each of which is a corporation. X is subject to the CAMT. For AFS purposes, X treats itself as a creditor to PRS1 and PRS1 treats itself as a debtor to X. For 2024, under their methods of financial accounting and under the terms of the loan, X reports on its AFS $50 of interest income from its investment in PRS1, and PRS1 reports on its AFS $50 of interest expense paid to X. Also, for 2024, PRS1 has $75x of FSI after deducting its interest expense paid to X. (ii) Analysis. Under § 1.56A-1(f), the classification of PRS1 for regular tax purposes applies for purposes of the section 56A regulations. Accordingly, X must determine its distributive share percentage with respect to PRS1 under paragraph (e)(2)(iii) of this section by computing a fraction, the numerator of which is $50x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $125x (100% of PRS1's FSI for 2024 plus the FSI amount included in the numerator for X's distributive share percentage). The resulting distributive share percentage is 40% ($50x/$125x). (5 ) Example 5: Determining distributive share percentage for entity that treats itself as owning 100 percent of the equity in the partnership for AFS purposes because the CAMT entity treats all other partners in the partnership as AFS non-partners —(i) Facts. PRS1 is treated as a partnership for Federal income tax purposes owned by X and Y, each of which is a corporation. For AFS purposes, X treats itself as owning 100% of the equity in PRS1. X also treats Y as a creditor with respect to PRS1 and treats PRS1 as a debtor with respect to Y. X is subject to the CAMT. For 2024, X reports on its AFS $75x of FSI from its investment in PRS1. Also, for 2024, PRS1 has $75x of FSI after deducting its interest expense paid to Y. As such, under their methods of financial accounting, X reports on its AFS $75 from its equity investment in PRS1, Y reports on its AFS $50 of interest income from its investment in PRS1, and PRS1 reports on its AFS $50 of interest expense paid to Y. (ii) Analysis. Under § 1.56A-1(f), the classification of PRS1 for regular tax purposes applies for purposes of the section 56A regulations. Accordingly, X must determine its distributive share percentage with respect to PRS1 under paragraph (e)(2)(iv) of this section by computing a fraction, the numerator of which is $75x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $125x (100% of PRS1's FSI for 2024 plus the sum of any amounts reflected in the PRS1's FSI that are treated as paid or accrued to Y). The resulting distributive share percentage is 60% ($75x/$125x). (6) Example 6: Adjustment of AFSI with respect to a partnership investment accounted for using the equity method in a tiered partnership structure— (i) Facts. The facts are the same as in paragraph (k)(1)(i) of this section ( Example 1 ), except that included in PRS1's $100x of FSI is $50x of FSI from its investment in PRS2, a partnership owned by PRS1 and A. PRS1 and PRS2 have the same taxable year and AFS year. For AFS purposes, PRS1 accounts for its interest in PRS2 using the equity method. For 2024, PRS2 has FSI of $150x, which includes $15x of covered book depreciation expense. For regular tax purposes, PRS2 has $45x of deductible tax depreciation with respect to section 168 property. Under the equity method, PRS1 includes 33 1/3 % of PRS2's FSI for 2024 on its AFS. (ii) Analysis: Computation beginning with respect to lowest-tier partnership. The following steps are used to compute X's distributive share amount from PRS1 for 2024, beginning with respect to the lowest-tier partnership. Under paragraphs (e)(3) and (f) of this section, PRS1 must determine its distributive share amount with respect to its investment in PRS2 in accordance with this section before X determines its distributive share amount with respect to PRS1. (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year: Under paragraph (c)(1) of this section, PRS1 disregards the $50x of FSI included on its AFS with respect to its investment in PRS2. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(i) of this section, PRS1 computes a fraction, the numerator of which is $50x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $150x (100% of PRS2's FSI). The resulting distributive share percentage is 33 1/3 % ($50x/$150x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS2's FSI of $150x must be adjusted to disregard the covered book depreciation expense, or $15x, under § 1.56A-15(d)(1)(iii) and reduced by the deductible tax depreciation, or $45x, under § 1.56A-15(d)(1)(ii). Accordingly, PRS2's modified FSI is $120x ($150x + $15x − $45x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, PRS1 must multiply its distributive share percentage (33 1/3 %) by the modified FSI of PRS2, or $120x, resulting in an amount of $40x. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraph (e)(1)(iv) and (e)(4) of this section, PRS1 must adjust its share of PRS2's modified FSI by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, PRS1's distributive share amount of PRS2's AFSI for Year 1 is $40x. (F) Step 6: Include distributive share amount in AFSI (or modified FSI if a CAMT entity is a partnership). Under paragraph (c)(2) of this section, PRS1 includes in its modified FSI the $40x distributive share amount from PRS2. Thus, after reducing PRS1's modified FSI from $100x to $50x, it is increased to $90x. (iii) Analysis: Computation with respect to PRS1. Under paragraphs (e)(3) and (f) of this section, because PRS1 is the last partnership in the chain, X determines its distributive share amount with respect to its investment in PRS1. (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year. Under paragraph (c)(1) of this section, X disregards the $50x of FSI it includes on its AFS with respect to its investment in PRS1 for Year 1. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(i) of this section, X computes a fraction, the numerator of which is $50x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $100x (100% of PRS1's FSI for Year 1). The resulting distributive share percentage is 50% ($50x/$100x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS1's FSI of $100x must be adjusted under § 1.56A-13(b) to disregard the $20x of income from the covered benefit plan within the meaning § 1.56A-13(c)(1) that was included for AFS purposes. PRS1's FSI must also be adjusted to disregard the covered book depreciation expense, or $10x, under § 1.56A-15(d)(1)(iii) and reduced by the deductible tax depreciation, or $10x under § 1.56A-15(d)(1)(ii). PRS1's FSI must further be adjusted to exclude its $50x of FSI with respect to its investment in PRS2 and to include its distributive share amount with respect to PRS2 of $40x, as determined in paragraph (k)(6)(ii)(F) of this section. Accordingly, PRS1's modified FSI is $70x ($100x − $20x + $10x − $10x − $50x + $40x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, X must multiply its distributive share percentage, or 50%, by the modified FSI of PRS1, or $70x, resulting in X having a share of $35x of the modified FSI of PRS1. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, X must adjust its share of PRS1's modified FSI by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, X's distributive share amount of PRS1's AFSI for 2024 is $35x. (F) Step 6: Include distributive share amount in AFSI. Under paragraph (c)(2) of this section, X includes in its AFSI the $35x distributive share amount from PRS1. Thus, after reducing X's AFSI from $250x to $200x, it is increased to $235x for 2024. (7) Example 7: Adjustment of AFSI with respect to a partnership investment accounted for using the equity method with a basis adjustment under section 743(b) related to section 168 property —(i) Facts. The facts are the same as in paragraph (k)(1)(i) of this section ( Example 1 ), except that X has a basis adjustment under section 743(b) with respect to its investment in PRS1, in turn with respect to section 168 property owned by PRS1. As result of the section 743(b) basis adjustment, X is allocated an additional $10x of deductible tax depreciation from PRS1's section 168 property. X does not have a corresponding equity interest method basis adjustment for financial statement purposes. (ii) Analysis. The analysis is the same as in paragraphs (k)(1)(ii)(A) through (D) of this section ( Example 1 ), and the remaining steps are as follows: (A) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, X must adjust its share of PRS1's modified FSI by its section 704(b) of the Code distributive share amount of PRS1's deductible tax depreciation for section 168 property from its section 743(b) basis adjustment with respect to its investment in PRS1, or $10x. X's distributive share amount of PRS1's AFSI for 2024 is $30x ($40x − $10x). (B) Step 6: Include distributive share amount in AFSI. Under paragraph (c)(2) of this section, X includes in its AFSI the $30x distributive share amount with respect to its investment in PRS1. Thus, after reducing X's AFSI from $250x to $200x, it is increased to $230x for 2024. (8) Example 8: Adjustment of AFSI with respect to a partnership investment accounted for using the fair value method —(i) Facts —(A) General facts. PRS3 is a partnership, Y is a corporation, and B is an individual. PRS3 is directly owned by Y and B. PRS3 and Y have the same taxable year and AFS year. For 2024, Y has FSI of $275x, consisting of $200x from its direct operations and $75x from its investment in PRS3, which it accounts for using the fair value method of accounting pursuant to which the FSI reported on its AFS with respect to PRS3 reflects the net change in the fair value of its investment in PRS3 during the taxable year. (B) Facts: PRS3. PRS3 has an interest in PRS4. PRS4 is a partnership. For 2024, PRS3 has FSI of $100x, which includes $14x of covered book depreciation expense and $50x from its investment in PRS4. PRS3 uses the fair value method to account for its assets and its FSI includes the total change in the fair value with respect to its assets. The FSI reported by PRS3 on its AFS with respect to its investment in PRS4 reflects the net change in the fair value of its investment in PRS4 during the taxable year, including changes in cash amounts. For regular tax purposes, PRS3 has deductible tax depreciation with respect to section 168 property of $36x per year for ten years. PRS3 and PRS4 have the same taxable year and AFS year. (C) Facts: PRS4. PRS4 uses the fair value method to account for its investment in its assets. The FSI reported on its AFS with respect to those assets reflects the net change in fair value of the assets during the taxable year, including changes in cash accounts. For Year 1, PRS4 has FSI of $150x, consisting of a $100x increase to cash amounts and a $50x increase to the value of certain property. PRS4 has no covered book depreciation expense for the section 168 property. For regular tax purposes, PRS4 has deductible tax depreciation with respect to section 168 property of $18x per year for ten years. (ii) Analysis: Begin computation with respect to lowest-tier partnership. Under paragraphs (e)(3) and (f) of this section, PRS3 must determine its distributive share amount with respect to its investment in PRS4 in accordance with this section before Y determines its distributive share amount with respect to PRS3. (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year. Under paragraph (c)(1) of this section, PRS3 disregards the $50x of FSI it includes on its AFS with respect to its investment in PRS4 for 2024. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(ii) of this section, PRS3 must compute a fraction, the numerator of which is $50x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $150x (the total change in the fair value of PRS4's assets, including changes in cash amounts and increases in the value of property, for PRS4's taxable year). The resulting distributive share percentage is 33 1/3 % ($50x/$150x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS4's FSI of $150x is reduced by the deductible tax depreciation, or $18x, under § 1.56A-15(d)(1)(ii). As a result, PRS4's modified FSI is $132x ($150x − $18x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, PRS3 multiplies its distributive share percentage (33 1/3 %) by the modified FSI of PRS4, or $132x, resulting in PRS3 having a share of $44x of the modified FSI of PRS4. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, PRS3 must adjust its share of PRS4's modified FSI by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, PRS3's distributive share amount of PRS4's AFSI for 2024 is $44x. (F) Step 6: Include distributive share amount in AFSI (or modified FSI if a CAMT entity is a partnership). Under paragraph (c)(2) of this section, PRS3 includes in its modified FSI the $44x distributive share amount from PRS4. Thus, after reducing PRS3's modified FSI with respect to its investment in PRS4 from $100x to $50x, it is increased to $94x for 2024. (iii) Analysis: Computation with respect to PRS3. Under paragraph (e)(3) of this section, because PRS3 is the last partnership in the chain, Y determines its distributive share amount with respect to its investment in PRS3. (A) Step 1: Disregard FSI amount with respect to partnership investment for the taxable year. Under paragraph (c)(1) of this section, Y disregards the $75x of FSI it includes on its AFS with respect to its investment in PRS3 for 2024. (B) Step 2: Calculate the distributive share percentage. Under paragraph (e)(2)(ii) of this section, Y must compute a fraction, the numerator of which is $75x (the amount disregarded under paragraph (c)(1) of this section) and the denominator of which is $100x (the total change in the fair value of PRS3's assets, including changes in cash amounts, during the PRS3's taxable year). The resulting distributive share percentage is 75% ($75x/$100x). (C) Step 3: Compute the modified FSI of the partnership. Under paragraph (e)(3) of this section, PRS3's FSI of $100x must be adjusted to disregard the covered book depreciation expense, or $14x, under § 1.56A-15(d)(1)(iii), and reduced by the deductible tax depreciation, or $36x, under § 1.56A-15(d)(1)(ii). PRS3's FSI must further be adjusted to exclude its $50x of FSI with respect to its investment in PRS4 and to include its distributive share amount with respect to PRS4, or $44x, as determined under paragraph (k)(4)(ii) of this section. Accordingly, PRS3's modified FSI is $72x ($100x + $14x − $36x − $50x + $44x). (D) Step 4: Multiply the distributive share percentage by the modified FSI of the partnership. Under paragraph (e)(1)(iii) of this section, Y must multiply its distributive share percentage, or 75%, by the modified FSI of PRS3, or $72x, resulting in Corporation Y having a share of $54x of modified FSI of Partnership C. (E) Step 5: Adjust the share of modified FSI by separately stated adjustments. Under paragraphs (e)(1)(iv) and (e)(4) of this section, Y must adjust its share of PRS3's modified FSI of $54x by any separately stated amounts listed in paragraph (e)(4)(ii) of this section. Because there are none, Y's distributive share amount of PRS3's AFSI for 2024 is $54x. (F) Step 6: Include distributive share amount in AFSI. Under paragraph (c)(2) of this section, Y includes in its AFSI the $54x distributive share amount from PRS3. Thus, after reducing Y's AFSI from $275x to $200x, it is increased to $254x for 2024. (9) Example 9: Computation of CAMT basis in partnership investment —(i) Facts. The facts are the same as in paragraph (k)(1)(i) of this section ( Example 1 ), except that PRS1 is formed on January 1, 2024, at which time X and A each contributes $50x to PRS. During 2024, X and A each contributes an additional $10x to PRS1 to meet its respective capital contribution requirement under the terms of the PRS1 agreement. (ii) Analysis— (A) Compute the CAMT basis in the partnership investment. Under paragraph (j)(3) of this section, X's initial CAMT basis in its PRS1 investment is equal to X's AFS basis in its PRS1 investment as of the first day of the partnership's first taxable year ending after December 31, 2019. Accordingly, because PRS1 was formed on January 1, 2024, X's initial AFS and CAMT basis under paragraph (j)(3) of this section is $0x. Under § 1.56A-20(c)(3)(ii) and paragraph (j)(3)(iv) of this section, X's $50x contribution results in X having an initial CAMT basis in its PRS1 investment of $50x on January 1, 2024, which is equal to its AFS basis in its PRS1 investment following the contribution. Under § 1.56A-20(c)(3)(ii) and paragraph (j)(3)(iv) of this section, X's CAMT basis in its PRS1 investment of $50x is increased by $10x at the time of X's additional $10x contribution in 2024. (B) Increase by the CAMT entity's positive distributive share amount under paragraph (j)(3)(ii) of this section or decrease (but not below zero) by its negative distributive share amount paragraph (j)(3)(iii) of this section for the taxable year. Under paragraph (j)(3)(ii) of this section, X must increase its CAMT basis in PRS1 by its distributive share amount of $40x (computed in paragraph (k)(1)(ii)(E) of this section) resulting in X having a CAMT basis of $100x ($60x + $40x) in its PRS 1 investment at the end of 2024. (10) Example 10: Limitation of negative distributive share amount in excess of CAMT basis— (i) Facts. The facts are the same as in paragraph (k)(9)(i) of this section ( Example 9 ). In 2025, X's distributive share amount with respect to its investment in PRS1, determined under paragraph (e) of this section, is −$120x. Further, in 2025 each of X and A contributes $10x to meet its respective capital contribution requirement under the terms of the PRS1 agreement. (ii) Analysis— (A) Limitation on allowance of negative distributive share. Under paragraph (j)(1) of this section, X must limit its 2025 negative distributive share amount with respect to its investment in PRS1 to its CAMT basis in the partnership. (B) Computation of CAMT basis in partnership investment. X must compute its CAMT basis in its investment in PRS1 for 2025. Under paragraph (j)(3) of this section, X's CAMT basis is adjusted by the items described in paragraph (j)(3) of this section for each taxable year and prior taxable years ending after December 31, 2019. Under paragraph (j)(3)(iv) of this section, X increases its CAMT basis of $100x as of the end of 2024 (which includes all of X's paragraph (j)(3) of this section items for 2024) by its 2025 contribution of $10x to $110x. Under paragraph (j)(3)(iii) of this section, X must decrease its CAMT basis (but not below zero) by its 2025 negative distributive share amount of −$120x. (C) Carryover of suspended negative distributive share amount. Under paragraph (j)(1) of this section, X includes the −$120x distributive amount in its AFSI for the 2025 taxable year only to the extent it does not exceed its CAMT basis in its partnership investment. Under paragraph (j)(2) of this section, X's excess negative distributive share amount of −$10x ($110x−$120x) is included in determining X's distributive share amount in the subsequent taxable year, subject to the limitation in paragraph (j)(1) of this section. (l) Applicability dates —(1) In general. Except as provided in paragraph (l)(2) of this section, this section applies to partnership taxable years ending after [DATE OF PUBLICATION OF FINAL RULE IN THE Federal Register ] and to taxable years of CAMT entities that are partners in which or with which such partnership taxable years end. (2) Exceptions —(i) Paragraph (d). Paragraph (d) of this section applies to taxable years of a CAMT entity ending after [DATE OF PUBLICATION OF FINAL RULE IN THE Federal Register ]. (ii) Coordination with certain other provisions during prior years —(A) Information reporting during prior years. A partnership must furnish to the IRS and any CAMT entity that is a partner in the partnership the information described in paragraphs (i)(1)(iv) and (v) of this section in a manner consistent with paragraphs (h) and (i) of this section. (B) Certain basis adjustments during prior years. A CAMT entity that is a partner in a partnership must make adjustments to the CAMT basis in its partnership investment consistent with those described in paragraphs (j)(3)(v), (vii), (xi), and (xii) of this section. (C) Certain adjustments during prior years. A CAMT entity's AFSI with respect to a partnership investment is determined without regard to any items included in the partnership's FSI that are described in § 1.56A-4(c)(1)(i) or 1.56A-8(b)(2). (iii) Applicability dates for rules described in paragraph (l)(2)(ii). The following are the applicability dates for the rules described in paragraph (l)(2)(ii) of this section: (A) Paragraph (l)(2)(ii)(A) of this section applies to taxable years of partnerships ending after September 13, 2024 and on or before [DATE OF PUBLICATION OF FINAL RULE IN THE Federal Register ]; (B) Paragraph (l)(2)(ii)(B) of this section applies to taxable years of CAMT entities ending after September 13, 2024 and on or before [DATE OF PUBLICATION OF FINAL RULE IN THE Federal Register ]; and (C) Except as provided in paragraph (l)(2)(iii)(D) of this section, paragraph (l)(2)(ii)(C) of this section applies to taxable years of partnerships ending after September 13, 2024 and on or before [DATE OF PUBLICATION OF FINAL RULE IN THE Federal Register ]. (D) When the items described in paragraph (l)(2)(ii)(C) of this section result from the occurrence of transfers (as defined in § 1.56A-4(b)(3)), paragraph (l)(2)(ii)(C) of this section applies to transfers occurring after September 13, 2024 and on or before [DATE OF PUBLICATION OF FINAL RULE IN THE Federal Register ].