A.  An election made pursuant to I.R.C. (26 USC) Section 761 to exclude an unincorporated organization from the application of all or part of Subchapter K of the Internal Revenue Code shall be binding upon the members of the unincorporated organization for purposes of computing the tax imposed by this Part.  Whenever such an election is made, the unincorporated organization making the election shall not be treated as a partnership for purposes of this Part.

B.  Under no circumstances shall income from an unincorporated organization that has made the I.R.C. Section 761 election be treated as “income from partnerships” for purposes of this Part; rather, it shall be treated by a member of the unincorporated organization as income from the underlying property as co-owner of the property.  The share of each item of income, gain, loss, deduction, or credit, realized or incurred by a member of such unincorporated organization that has made the I.R.C. Section 761 election shall be treated as follows:

(1)  The member shall be treated as directly realizing the member’s share of items of gross income attributable to the unincorporated organization.

(2)  The member shall be treated as directly incurring the member’s share of items of expense attributable to the unincorporated organization.

(3)  The member shall be treated as directly accruing items of credit attributable to the unincorporated organization.

(4)  The member shall treat the member’s interest in each asset of the unincorporated organization as owned directly by the member.

(5)  The member shall treat the member’s share of each liability as incurred directly by the member.

Acts 2005, No. 351, §1, eff. for all taxable periods beginning after Dec. 31. 2004.