syndicate
(3) Special rule for syndicates (A) In general Notwithstanding paragraph (2), the term “hedging transaction” shall not include any transaction entered into by or for a syndicate. (B) Syndicate defined For purposes of subparagraph (A), the term “syndicate” means any partnership or other entity (other than a corporation which is not an S corporation) if more than 35 percent of the losses of such entity during the taxable year are allocable to limited partners or limited entrepreneurs (within the meaning of section 461(k)(4) ). (C) Holdings attributable to active management For purposes of subparagraph (B), an interest in an entity shall not be treated as held by a limited partner or a limited entrepreneur (within the meaning of section 461(k)(4) )— (i) for any period if during such period such interest is held by an individual who actively participates at all times during such period in the management of such entity, (ii) for any period if during such period such interest is held by the spouse, children, grandchildren, and parents of an individual who actively participates at all times during such period in the management of such entity, (iii) if such interest is held by an individual who actively participated in the management of such entity for a period of not less than 5 years, (iv) if such interest is held by the estate of an individual who actively participated in the management of such entity or is held by the estate of an individual if with respect to such individual such interest was at any time described in clause (ii), or (v) if the Secretary determines (by regulations or otherwise) that such interest should be treated as held by an individual who actively participates in the management of such entity, and that such entity and such interest are not used (or to be used) for tax–avoidance purposes. For purposes of this subparagraph, a legally adopted child of an individual shall be treated as a child of such individual by blood.