Annual recharacterization amount For purposes of this subsection— (A) In general The term annual recharacterization amount means, with respect to any applicable partnership interest for any partnership taxable year, an amount equal to the product of— (i) the specified rate determined under subparagraph (B) for the calendar year in which such taxable year begins, multiplied by (ii) the excess (if any) of— (I) an amount equal to the applicable percentage of the partnership’s aggregate invested capital for such taxable year, over (II) the specified capital contribution of the partner with respect to the applicable partnership interest for such taxable year. If a taxpayer holds an applicable partnership interest for less than the entire taxable year, the amount determined under the preceding sentence shall be ratably reduced. (B) Specified rate For purposes of subparagraph (A), the term specified rate means, with respect to any calendar year, a percentage equal to— (i) the Federal long-term rate determined under section 1274(d)(1) for the last month of the calendar year, plus (ii) 10 percentage points. (C) Applicable percentage (i) In general The term applicable percentage means, with respect to any applicable partnership interest, the highest percentage of profits of the partnership that could be allocated with respect to such interest for the taxable year (consistent with the partnership agreement and assuming such facts and circumstances with respect to such taxable year as would result in such highest percentage). (ii) Secretarial authority The Secretary shall prescribe rules for the determination of the applicable percentage in cases in which the percentage of profits of a partnership that are to be allocated with respect to an applicable partnership interest varies on the basis of the aggregate amount of such profits. Such rules may provide a percentage which may be used in lieu of the highest percentage determined under clause (i) in cases where such other percentage is consistent with the purposes of this