Page:United States Statutes at Large Volume 100 Part 3.djvu/560

 100 STAT. 2368

PUBLIC LAW 99-514—OCT. 22, 1986

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"(I) a timeshare right to use or a timeshare ownership interest in residential real property for not more than 6 weeks, or a right to use specified campgrounds for recreational purposes, or "(II) any residential lot but only if the taxpayer (or any related person) is not to make any improvements with respect to such lot, and "(ii) which is not guaranteed by any person other than an individual. For purposes of clause (i)(I), a timeshare right to use (or timeshare ownership interest in) property held by the spouse, children, grandchildren, or parents of an individual shall be treated as held by such individual. "(B) INTEREST ON DEFERRED TAX.—If subparagraph (A) applies to any installment obligation, interest shall be paid on the portion of any tax for any taxable year (determined without regard to any deduction allowable for such interest) which is attributable to the receipt of payments on such obligation in such year (other than payments received in the taxable year of the sale). Such interest shall be computed for the period from the date of the sale to the date on which the payment is received using the applicable Federal rate under section 1274 (without regard to subsection (d)(2) or (3) thereof) in effect at the time of the sale, compounded semiannually. "(C) TIME FOR PAYMENT.—Any interest payable under this paragraph with respect to a payment shall be treated as an addition to tax for the taxable year in which the payment is received, except that the amount of such interest shall be taken into account in computing the amount of any deduction allowable to the taxpayer for interest paid or accrued during such taxable year. "(5) REGULATIONS.—The Secretary shall prescribe regulations as may be necessary to carry out the purposes of this section, including regulations— "(A) disallowing the use of the installment method in whole or in part for transactions in which the rules of this section otherwise would be avoided through the use of related parties, pass-through entities, or intermediaries, "(B) providing for the proper treatment of reserves (including consistent treatment with assets held in the reserves), and "(C) providing that subsection (b)(4) shall not apply where necessary to prevent the avoidance of the application of this section." (b) CLERICAL AMENDMENT.—The table of sections for subpart B of part II of subchapter E of chapter 1 is amended by inserting after the item relating to section 453B the following new item: "Sec. 453C. Certain indebtedness treated as payments on installment obligations." (c) EFFECTIVE DATES.—

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(1) IN GENERAL.—Except as otherwise provided in this section, the amendments made by this section shall apply to taxable years ending after December 31, 1986, with respect to dispositions after February 28, 1986.

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