Page:United States Statutes at Large Volume 100 Part 3.djvu/539

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2347 /

"(A) community property laws shall be disregarded, "(B) stock held by a plan described in section 401(a) which is exempt from tax under section 501(a) shall be treated as held by an employee described in paragraph (2)(B)(i), and "(C) at the election of the common parent of an affiliated group (within the meaning of section 1504(a)), all members of such group may be treated as 1 taxpayer for purposes of paragraph (2)(B) if substantially all of the activities of all such members involve the performance of services in the same field described in paragraph (2)(A). "(5) SPECIAL RULE FOR SERVICES.—In the case of any person using an accrual method of accounting with respect to amounts to be received for the performance of services by such person, such person shall not be required to accrue any portion of such amounts which (on the basis of experience) will not be collected. This paragraph shall not apply to any amount if interest is required to be paid on such amount or there is any penalty for failure to timely pay such amount. "(6) TREATMENT OF CERTAIN TRUSTS SUBJECT TO TAX ON UNRELATED BUSINESS INCOME.—For purposes of this section, a trust

subject to tax under section 511(b) shall be treated as a C corporation with respect to its activities constituting an unrelated trade or business. "(7) COORDINATION WITH SECTION 481.—In the case of any taxpayer required by this section to change its method of accounting for any taxable year— "(A) such change shall be treated as initiated by the taxpayer, "(B) such change shall be treated as made with the consent of the Secretary, and "(C) the period for taking into account the adjustments under section 481 by reason of such change— "(i) except as provided in clause (ii), shall not exceed 4 years, and "(ii) in the case of a hospital, shall be 10 years." (b) COORDINATION WITH APPLICATION OF ECONOMIC PERFORMANCE RULES TO TAX SHELTERS.—

(1) IN GENERAL.—So much of section 461(i) as precedes paragraph (3) thereof is amended to read as follows: "(i) SPECIAL RULES FOR TAX SHELTERS.— "(1) RECURRING ITEM EXCEPTION NOT TO APPLY.—In

the case of a tax shelter, economic performance shall be determined without regard to paragraph (3) of subsection (h). "(2) SPECIAL RULE FOR SPUDDING OF OIL OR GAS WELLS.—In the

case of a tax shelter, economic performance with respect to the act of drilling an oil or gas well shall be treated as having occurred within a taxable year if drilling of the well commences before the close of the 90th day after the close of the taxable year." (2) CONFORMING AMENDMENT.—Paragraph (4) of section 461(i)

is amended to read as follows: "(4) SPECIAL RULES FOR FARMING.—In the case of the trade or business of farming (as defined in section 464(e)), in determining whether an entity is a tax shelter, the definition of farming syndicate in section 464(c) shall be substituted for subparagraphs (A) and (B) of paragraph (3)."

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