Modifications to treatment of certain losses

(a) Losses from certain capital assets which become worthless (1) When treated as loss Section 165(g)(1) is amended by striking on the last day of the taxable year and inserting at the time of the identifiable event establishing worthlessness. (2) Treatment of partnership indebtedness Section 165(g)(2)(C) is amended by inserting, by a partnership, after by a corporation. (3) Treatment of abandonment Section 165(g) is amended by adding at the end the following new paragraph: (4) Treatment of abandonment For purposes of this subsection and subsection (m), abandonment shall be treated as an identifiable event establishing worthlessness.. (4) Treatment of partnership interest Section 165 is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection: (m) Worthless partnership interest If any interest in a partnership becomes worthless during the taxable year, the loss resulting therefrom shall, for purposes of this subtitle, be treated as a loss from the sale or exchange of the interest in the partnership at the time of the identifiable event establishing worthlessness.. (b) Effective date The amendments made by this section shall apply to losses arising in taxable years beginning after the date of the enactment of this Act.