Page:United States Statutes at Large Volume 100 Part 3.djvu/1006

 100 STAT. 2814

PUBLIC LAW 99-514—OCT. 22, 1986 (6) CLARIFICATION OF ELECTION FOR EARLIER EFFECTIVE DATE.—

Subparagraph (A) of section 91(g)(2) of the Tax Reform Act of ft 1984 (relating to taxpayer may elect earlier application) is amended— (A) by striking out "incurred before" and inserting in lieu •: thereof "incurred on or before", (B) by striking out "incurred on or after" and inserting in ': lieu thereof "incurred after", and • ' -, V (C) by adding at the end thereof the following new sentence: -:•' ' "The Secretary of the Treasury or his delegate may by regulations provide that (in lieu of an election under the preceding sentence) a taxpayer may (subject to such conditions as such regulations may provide) elect to have subsection (h) of section 461 of such Code apply to the taxpayer's entire taxable year in which occurs July 19, 1984." '«

(7) SPECIAL RULES FOR DESIGNATED SETTLEMENT FUNDS.—

(A) IN GENERAL.—Subpart C of part II of subchapter E of chapter 1 (relating to taxable year for which deduction taken) is amended by adding at the end thereof the following new section: "SEC. 468B. SPECIAL RULES FOR DESIGNATED SETTLEMENT FUNDS.

"(a) IN GENERAL.—For purposes of section 461(h), economic performance shall be deemed to occur as qualified payments are made by the taxpayer to a designated settlement fund.
 * "(b) TAXATION OF DESIGNATED SETTLEMENT FUND.—

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"(1) IN GENERAL.—There is imposed on the gross income of any designated settlement fund for any taxable year a tax at a rate equal to the maximum rate in effect for such taxable year under section 1(e). "(2) CERTAIN EXPENSES ALLOWED.—For purposes of paragraph

(1), gross income for any taxable year shall be reduced by the amount of any administrative costs (including State and local •. taxes) and other incidental expenses of the designated settlement fund (including legal, accounting, and actuarial -^; expenses)— l©&i»j "(A) which are incurred in connection with the operation of the fund, and "(B) which would be deductible under this chapter for H:v purposes of determining the taxable income of the corporation, a- no other deduction shall be allowed to the fund. !;• "(3) TRANSFERS TO THE FUND.—In the case of any qualified payment made to the fund— "(A) the amount of such payment shall not be treated as iit income of the designated settlement fund. If "(B) the basis of the fund in any property which constitutes a qualified payment shall be equal to the fair market value of such property at the time of payment, and "(C) the fund shall be treated as the owner of the prop, ? erty in the fund (and any earnings thereon). "(4) TAX IN UEU OF OTHER TAXATION.—The tax imposed by

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paragraph (1) shall be in lieu of any other taxation under thL subtitle of income from assets in the designated settlement fund.

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