Page:United States Statutes at Large Volume 100 Part 3.djvu/481

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2289

was included in the gross income of such corporation by reason of paragraph (a). (7) TREATMENT OF AMOUNTS PAID FROM QUALIFIED REFINANC-

ING-RELATED RESERVE.—

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(A) IN GENERAL.—With respect to any payment from a qualified refinancing-related reserve out of amounts excluded from gross income by reason of paragraph (1)— (i) no deduction shall be allowed under chapter 1 of such Code, and (ii) the basis of any property acquired with such payment (determined without regard to this subparau graph) shall be reduced by the amount of such payment. (B) ORDERING RULES.—For purposes of subparagraph (A), payments from a reserve shall be treated as being made— (i) first from amounts excluded from gross income by reason of paragraph (1) to the extent thereof, and (ii) then from other amounts in the reserve.

.. (f) EFFECTIVE DATE.—

(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 1986. (2) SUBSECTION (e).—

(A) Except as provided in subparagraph (B), subsection (e) shall apply to taxable years beginning before January 1, 1986. (B) Subsection (e)(7) shall apply to amounts paid or incurred, and property acquired, in taxable years beginning, after December 31, 1985. SEC. 645. SPECIAL RULES RELATING TO PERSONAL HOLDING COMPANY TAX. ^' (a) COMPUTER SOFTWARE ROYALTIES.—

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(1) IN GENERAL.—Paragraph (1) of section 543(a) (defining personal holding company income) is amended— (A) by striking out "and" at the end of subparagraph (A), (B) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ", and", and (C) by adding at the end thereof the following new subparagraph: "(C) active business computer software royalties (within the meaning of subsection (d))." (2)

ACTIVE BUSINESS COMPUTER SOFTWARE ROYALTIES DE-

FINED.—Section 543 is amended by adding at the end thereof the following new subsection: = "(d) ACTIVE BUSINESS COMPUTER SOFTWARE ROYALTIES.—

"(1) IN GENERAL.—For purposes of this section, the term 'active business computer software royalties' means any royalties— "(A) received by any corporation during the taxable year in connection with the licensing of computer software, and "(B) with respect to which the requirements of paragraphs (2), (3), (4), and (5) are met. p.-

"(2) ROYALTIES MUST BE RECEIVED BY CORPORATION ACTIVELY

ENGAGED IN COMPUTER SOFTWARE BUSINESS.—The requirements of this paragraph are met if the royalties described in paragraph (D—

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