702 with respect to such interests for such taxable year (determined without regard to any items of loss taken into account in determining net capital gain under subsection (b)(1)). (d) Applicable partnership interest For purposes of this section— (1) In general The term applicable partnership interest means any interest in a partnership which, directly or indirectly, is transferred to (or is held by) the taxpayer in connection with the performance of services by the taxpayer, or any other person, in any applicable trade or business. (2) Applicable trade or business (A) In general The term applicable trade or business means any trade or business conducted on a regular, continuous, and substantial basis which, regardless of whether the activities are conducted in one or more entities, consists, in whole or in part, of— (i) raising or returning capital, (ii) investing in (or disposing of) trades or businesses (or identifying trades or businesses for such investing or disposition), and (iii) developing such trades or businesses. (B) Treatment of research and experimentation activities Any activity involving research or experimentation (within the meaning of section 469(c)(4)) shall be treated as a trade or business for purposes of clauses (ii) and (iii) of subparagraph (A). (e) Transfer of applicable partnership interest to related person (1) In general If a taxpayer transfers any applicable partnership interest, directly or indirectly, to a person related to the taxpayer, the taxpayer shall include in gross income (as ordinary income) so much of the taxpayer’s recharacterization account balance for such taxable year as is allocable to such interest (determined in such manner as the Secretary may provide and reduced by any amount treated as ordinary income under subsection (a) with respect to the transfer of such interest). (2) Related person For purposes of this paragraph, a person is related to the taxpayer if— (A) the person is a member of the taxpayer’s family within the meaning of section 318(a)(1), or (B) the