Page:United States Statutes at Large Volume 100 Part 3.djvu/1002

 100 STAT. 2810

PUBLIC LAW 99-514—OCT. 22, 1986

SEC. 1805. AMENDMENTS RELATED TO PARTNERSHIP PROVISIONS. (a) AMENDMENTS RELATED TO SECTION 72 OF THE ACT. — (1) CLARIFICATION THAT CHANGE NEED NOT OCCUR DURING TAXABLE YEAR OF PAYMENT.—

(A) Clause (i) of section 706(d)(2)(A) is amended by striking out "each such item" and inserting in lieu thereof "such item". (B) Subparagraph (B) of section 706(d)(2) is amended by striking out "which are described in paragraph (1) and". (2) CLERICAL AMENDMENT.—Clause (i) of section 706(d)(2)(C) (relating to items attributable to periods not within taxable year) is amended by striking out "the first day of such taxable year" and inserting in lieu thereof "the first day of the taxable year". (b) AMENDMENT RELATED TO SECTION 73 OF THE ACT.—Clause (iii)

of section 707(a)(2)(B) (relating to treatment of certain property transfers) is amended by striking out "sale of property" and inserting in lieu thereof "sale or exchange of property". (c) AMENDMENTS RELATED TO SECTION 75 OF THE ACT.—

(1) LIMITATION ON AMOUNT OF GAIN.—Section 386 (relating to

transfers of partnership and trust interests by a corporation) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: "(d) LIMITATION ON AMOUNT OF GAIN RECOGNIZED IN CASE OF NONLIQUIDATING DISTRIBUTIONS.—In the case of any distribution by a

corporation to which section 311 applies, the amount of any gain recognized by reason of subsection (a) shall not exceed the amount of the gain which would have been recognized if the partnership interest had been sold. The Secretary may by regulations provide that the amount of such gain shall be computed without regard to any loss attributable to property contributed to the partnership for the principal purpose of recognizing such loss on the distribution." (2) CLARIFICATION OF SECTION 761(e).—Subsection (e) of section 761 (relating to distributions treated as exchanges) is amended— (A) by striking out "For purposes of" and inserting in lieu thereof "Except as otherwise provided in regulations, for purposes of", (B) by striking out "any distribution (not otherwise treated as an exchange)" and inserting in lieu thereof "any ^' distribution of an interest in a partnership (not otherwise . ^ treated as an exchange)", and 7,';' (C) by striking out "DISTRIBUTIONS" in the subsection heading and inserting in lieu thereof "DISTRIBUTIONS OF PARTNERSHIP INTERESTS". (d) AMENDMENT RELATED TO SECTION 77 OF THE ACT.—Subpara-

graph (A) of section 1031(a)(3) (relating to requirement that property be identified) is amended by striking out "before the day" and inserting in lieu thereof "on or before the day". SEC. 1806. AMENDMENTS RELATED TO TRUST PROVISIONS. (a) AMENDMENT RELATED TO SECTION 81 OF THE ACT.—Subpara-

graph (B) of section 643(e)(3), as redesignated by subsection (c) (relating to election to recognize gain), is amended to read as follows: "(B) ELECTION.—Any election under this paragraph shall apply to all distributions made by the estate or trust during

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