Page:United States Statutes at Large Volume 100 Part 3.djvu/537

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2345

megawatts electric" of an electric generating unit located in Illinois or Mississippi for which a binding written contract was in effect on December 31, 1980, then any investment tax credit with respect to such unit shall be described in this subparagraph. The aggregate amount of investment tax credits with respect to such unit shall be described in this subparagraph. (C) If, on September 25, 1985, a regulated electric utility owned an undivided interest, within the range of 1,104 and 1,111, in the "maximum dependable capacity, net, megawatts electric" of an electric generating unit located in Louisiana for which a binding written contract was in effect on December 31, 1980, then any investment tax credit of such electric utility shall be described in this subparagraph. The aggregate amount of investment tax credits allowed solely by reason of being described by this subparagraph shall not exceed $20,000,000. SEC. 702. STUDY OF BOOK AND EARNINGS AND PROFITS ADJUSTMENTS.

The Secretary of the Treasury or his delegate shall conduct a study of the operation and effect of the provisions of sections 56(f) and 56(g) of the Internal Revenue Code of 1986.

TITLE VIII—ACCOUNTING PROVISIONS Subtitle A—General Provisions SEC. 801. LIMITATION ON USE OF CASH METHOD OF ACCOUNTING.

(a) GENERAL RULE.—Subpart A of part II of subchapter E of chapter 1 (relating to methods of accounting) is amended by adding at the end thereof the following new section: "SEC. 448. LIMITATION ON USE OF CASH METHOD OF ACCOUNTING.

"(a) GENERAL RULE.—Except as otherwise provided in this section, in the case of a— "(1) C corporation, "(2) partnership which has a C corporation as a partner, or "(3) tax shelter, taxable income shall not be computed under the cash receipts and disbursements method of accounting. "(b) EXCEPTIONS.— "(1) FARMING BUSINESS.—Paragraphs (1) and (2) of subsection

(a) shall not apply to any farming business. "(2) QUALIFIED PERSONAL SERVICE CORPORATIONS.—Paragraphs

(1) and (2) of subsection (a) shall not apply to a qualified personal service corporation, and such a corporation shall be treated as an individual for purposes of determining whether paragraph (2) of subsection (a) applies to any partnership. "(3)

ENTITIES WITH

GROSS RECEIPTS OF NOT MORE THAN

$5,000,000.—Paragraphs (1) and (2) of subsection (a) shall not apply to any corporation or partnership for any taxable year if, for all prior taxable years beginning after December 31, 1985, such entity (or any predecessor) met the $5,000,000 gross receipts test of subsection (c). "(c) $5,000,000 GROSS RECEIPTS TEST.—For purposes of this section—

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