Inserts a new paragraph (4) into subsection (c) of 26 U.S.C. §83 establishing special rules for partnership interests transferred in connection with the performance of services, and redesignates the existing paragraph (4) as paragraph (5).

Creates new tax rules for partnership interests given for performing services and changes how so‑called "carried interests" (investment services partnership interests) are taxed. It sets a default valuation rule and income‑election treatment for service partners, and generally reclassifies most gains from carried interests as ordinary income while allowing narrow exceptions and directing Treasury to issue anti‑abuse and reporting rules. The changes mostly apply to partnership interests transferred, acquired, or realized after the law takes effect and include procedural rules for elections and reporting.