at all times during the taxable year by such real estate investment trust (determined with the application of section 267(c)). (III) Such partnership meets the requirements of paragraphs (2), (3), and (4) of section 856(c). (ii) Certain partnerships owning other publicly traded partnerships Subparagraph (A) shall not apply in the case of a partnership which meets each of the following requirements: (I) Substantially all of the assets of such partnership consist of interests in one or more publicly traded partnerships (determined without regard to subsection (b)(2)). (II) Substantially all of the income of such partnership is ordinary income or section 1231 gain (as defined in section 1231(a)(3)). (E) Transitional rule Subparagraph (A) shall not apply to any taxable year of the partnership beginning before the date which is 10 years after the date of the enactment of this paragraph. . (d) Imposition of penalty on underpayments (1) In general Subsection (b) of section 6662 is amended by inserting after paragraph (7) the following new paragraph: (8) The application of section 710(e) or the regulations or other guidance prescribed under section 710(g) to prevent the avoidance of the purposes of section 710. . (2) Amount of penalty (A) In general Section 6662 is amended by adding at the end the following new subsection: (l) Increase in penalty in case of property transferred for investment management services In the case of any portion of an underpayment to which this section applies by reason of subsection (b)(8), subsection (a) shall be applied with respect to such portion by substituting 40 percent for 20 percent . . (B) Conforming amendment Subparagraph (B) of section 6662A(e)(2) is amended by striking or (i) and inserting , (i), or (k) . (3) Special rules for application of reasonable cause exception Subsection (c) of section 6664 is amended— (A) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively