Page:United States Statutes at Large Volume 100 Part 3.djvu/476

 100 STAT. 2284

PUBLIC LAW 99-514—OCT. 22, 1986 (ii) CONFORMING AMENDMENT.—Section 1239(c) is amended by striking o u t " 8 0 - P E R C E N TO W N E D E N T I T Y "

in the heading thereof and inserting in lieu thereof '

"CONTROLLED E N T I T Y ", (C) CONSTRUCTIVE O W N E R S H I P. — Paragraph (2) of section

1239(c) is amended to read a s follows: "(2) CONSTRUCTIVE O W N E R S H I P. — For purposes of t h i s section,

ownership shall be determined in accordance with r u l e s similar to the rules under section 267(c) (other than paragraph (3) thereof)." (D) CONFORMING AMENDMENT. — S e c t i o n 453(g) is amended by striking o u t " 8 0 - P E R C E N TO W N E D " in the heading thereof

and inserting in lieu thereof "CONTROLLED". (2) PARTNERSHIP S. — Paragraph (2) of section 707(b) (relating to gains t r e a t e d a s o r d i n a r y income) is amended by striking out "80 p e r c e n t " each place it a p p e a r s and inserting i n lieu thereof "50 percent". (3) INSTALLMENT SALES.—Paragraph (1) of section 453(f) (defining related person) is amended to read a s follows: "(1) RELATED PERSON.—Except for purposes of subsection (g)

and (h), the term 'related person' means — "(A) a person whose stock would be a t t r i b u t e d under section 318(a) (other than paragraph (4) thereof) to the person first disposing of the property, o r "(B) a person w h o b e a r s a relationship described in section 267(b) to the person first disposing of the property." (b) RULES R E L A T I N G TO C O N T I N G E N T P A Y M E N T S. — (1) P A Y M E N T S TO BE RECEIVED DEFINED.—Section 453(f) (relat-

ing to definitions and special rules) is amended by adding a t the end thereof the following new paragraph: "(8) P A Y M E N T S TO BE RECEIVED D E F I N E D. — The term ' payment

to be received' includes— "(A) the aggregate a m o u n t of all payments which a r e not '^ contingent a s to a m o u n t, and "(B) the fair m a r k e t v a l u e of any payments which a r e ' contingent a s to a m o u n t. " (2) S A L E O F DEPRECIABLE PROPERTY BETWEEN RELATED PAR-

TIES.—Paragraph (1) of section 453(g) (relating to sale of depreciable property to controlled entities) is amended to read a s follows: "(1) IN GENERAL.—In the case of a n installment sale of depreciable property between related persons (within the m e a n i n g of section 1239(b))— "(A) subsection (a) shall not apply, and "(B) for purposes of this title— "(i) except a s provided i n clause (ii), all payments to be received shall be t r e a t e d a s received in the year of "' the disposition, and "(ii) in the case of any payments which a r e contingent a s to a m o u n t b u t with respect to which the fair • m a r k e t value may not be reasonably ascertained— ' "(I) the basis shall be recovered ratably, and "(II) the purchase r may not increase the basis of any property acquired in such sale by any a m o u n t before such t i m e a s the seller includes such a m o u n t in income." v. (c) EFFECTIVE D A T E. —

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