Page:United States Statutes at Large Volume 100 Part 3.djvu/561

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2369

(2) EXCEPTION FOR CERTAIN SALES OF PROPERTY BY A MANUFACTURER TO A DEALER.—

(A) IN GENERAL.—The amendments made by this section shall not apply to any installment obligation arising from the disposition of tangible personal property by a manufacturer (or any affiliate) to a dealer if— (i) the dealer is obligated to pay on such obligation only when the dealer resells (or rents) the property, (ii) the manufacturer has the right to repurchase the property at a fixed (or siscertainable) price after no later than the 9-month period beginning with the date of the sale, and (iii) such disposition is in a taxable year with respect to which the requirements of subparagraph (B) are met. (B) RECEIVABLES MUST BE AT LEAST 50 PERCENT OF TOTAL

SALES.— (i) IN GENERAL.—The requirements of this subparagraph are met with respect to any taxable year if for such taxable year and the preceding taxable year the aggregate face amount of installment obligations described in subparagraph (A) is at least 50 percent of the total sales to dealers giving rise to such obligations. (ii) TAXPAYER MUST FAIL FOR 2 CONSECUTIVE YEARS.—

A taxpayer shall be treated as failing to meet the requirements of clause (i) only if the taxpayer fails to meet the 50-percent test for both the tsixable year and the preceding taxable year. (C) TRANSITION RULE.—An obligation issued before the date of the enactment of this Act shall be treated as described in subparagraph (A) if, within 60 days after such date, the taxpayer modifies the terms of such obligation to conform to the requirements of subparagraph (A). (D) APPLICATION WITH OTHER OBLIGATIONS.—In applying

section 453C of the Internal Revenue Code of 1986 to any installment obligations to which the amendments made by this section apply, obligations described in subparagraph (A) shall not be treated as applicable installment obligations (within the meaning of section 453C(e)(l) of such Code). (E) OTHER REQUIREMENTS.—This paragraph shall apply only if the taxpayer meets the requirements of subparagraphs (A) and (B) for its first taxable year beginning after the date of the enactment of this Act. (3) EXCEPTION FOR CERTAIN OBLIGATIONS.—In applying the amendments made by this section to any installment obligation of a corporation incorporated on January 13, 1928, the following indebtedness shall not be taken into account in determining the allocable installment indebtedness of such corporation under section 453C of the Internal Revenue Code of 1986 (as added by this section): (A) 12% percent subordinated debentures with a total face amount of $175,000,000 issued pursuant to a trust indenture dated as of September 1, 1985. (B) A revolving credit term loan in the maximum amount of $130,000,000 made pursuant to a revolving credit and security agreement dated as of September 6, 1985, payable

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