Page:United States Statutes at Large Volume 100 Part 3.djvu/528

 100 STAT. 2336

PUBLIC LAW 99-514—OCT. 22, 1986 g r a p h (A) shall be t r e a t e d a s a deduction allocable to such activity in the 1st succeeding taxable year. "(2) T A X SHELTER FARM ACTIVITY.—For purposes of t h i s subsec-

tion, the term 'tax shelter farm activity' means— "(A) any farming syndicate as defined in section 464(c) (as modified by section 461(i)(4)(A)), and "(B) any other activity consisting of farming which is a passive activity (within the m e a n i n g of section 469(d), without regard to paragraph (1)(B) thereof). "(3) APPLICATION TO PERSONAL SERVICE CORPORATIONS.—For

purposes of paragraph (1), a personal service corporation (within the m e a n i n g of section 469(g)(1)(C)) shall be t r e a t e d a s a taxpayer other than a corporation. "(b) DISALLOWANCE O F PASSIVE ACTIVITY LOSS.—In c o m p u t i n g the

alternative minimum taxable income of the tax p a y e r for any taxable year, section 469 shall apply, except that in applying section 469— "(1) the adjustments of section 56 shall apply, "(2) any deduction to the e x t e n t such deduction is a n item of tax preference under section 57(a) shall not be t a k e n into account, and "(3) the provisions of section 469(1) (relating to phase-in of disallowance) shall not apply. "(c) SPECIAL RULES. — For purposes of t h i s section— "(1) SPECIAL RULE FOR INSOLVENT TAXPAYERS.—

"(A) IN GENERAL.—The a m o u n t of losses to which subsection (a) or (b) applies shall be reduced by the a m o u n t (if any) by which the tax p a y e r is insolvent a s of the close of the taxable year. "(B) INSOLVENT.—For purposes of this paragraph, the term 'insolvent' means the excess of liabilities over the fair m a r k e t value of assets. "(2) Loss ALLOWED FOR YEAR OF DISPOSITION OF FARM SHELTER ACTIVITY.—If the tax p a y e r disposes of his e n t i r e interest in any tax shelter farm activity during any taxable year, the a m o u n t of the loss a t t r i b u t a b l e to such activity (determined after carryovers under subsection (a)(1)(B)) shall (to the e x t e n t otherwise allowable) be allowed for such taxable year in computing a l t e r n a t i v e minimum taxable income and not t r e a t e d a s a loss from a tax shelter farm activity. "SEC. 59. OTHER DEPINITIONS AND SPECIAL RULES. "(a) ALTERNATIVE MINIMUM T A X FOREIGN T A X C R E D I T. — For pur-

poses of this part— "(1) IN GENERAL.—The a l t e r n a t i v e minimum tax foreign tax credit for any taxable year shall be the credit which would be determined under section 27(a) for such taxable year if— "(A) the a m o u n t determined under section 55(b)(1)(A) were the tax against which such credit w a s t a k e n for purposes of section 904 for the taxable year and all prior taxable years beginning after December 31, 1986, "(B) section 904 were applied on the basis of a l t e r n a t i v e minimum taxable income instead of taxable income, and "(C) for purposes of section 904, any increase in alternative minimum taxable income by reason of section 56(c)(1)(A) (relating to adjustment for book income) shall have the same proportionate source (and character) as

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