by a specified medical research small business pass-thru entity. (B) Treatment of losses and deductions (i) In general Losses or deductions of a taxpayer in connection with qualified medical research activities carried on by a specified medical research small business pass-thru entity shall not be treated as losses or deductions, respectively, from a passive activity except as provided in clause (ii) and subparagraph (C). (ii) Limitation Clause (i) shall apply to losses and deductions of a taxpayer in connection with a specified medical small business pass-thru entity for a taxable year only to the extent that the aggregate losses and deductions of the taxpayer in connection with qualified medical research activities of such entity for such taxable year do not exceed the portion of the taxpayer’s adjusted basis in the taxpayer’s ownership interest in such entity that is attributable to money or other property contributed— (I) in exchange for such ownership interest, and (II) specifically for use in connection with qualified medical research activities. For purposes of the preceding sentence, the taxpayer’s basis shall not include any portion of such basis which is attributable to an increase in a partner’s share of the liabilities of a partnership that is considered under section 752(a) as a contribution of money. (C) Treatment of carryovers Subparagraph (B)(i) shall not apply to the portion of any loss or deduction that is carried over under subsection (b) into a taxable year other than the taxable year in which such loss or deduction arose. (D) Qualified medical research activity For purposes of this paragraph, the term qualified medical research activity means any qualified research (within the meaning of section 41(d)) with respect to qualified countermeasures (as defined in section 319F–1(a)(2) of the Public Health Service Act (42 U.S.C. 247d–6a(a)(2))). (E) Specified medical research small business pass-thru entity For purposes of this paragraph, the term specified medical research small business pass-thru