Page:United States Statutes at Large Volume 100 Part 3.djvu/563

 PUBLIC LAW 99-514—OCT. 22, 1986 (7)

100 STAT. 2371

SPECIAL RULE FOR SALES OF PERSONAL PROPERTY BY

DEALERS.—In the case of installment obligations arising from the sale of personal property in the ordinary course of the trade or business of the taxpayer, solely for purposes of determining the time for payment of tax and interest payable with respect to such tax— (A) any increase in tax imposed by chapter 1 of the Internal Revenue Code of 1986 for the 1st taxable year of the taxpayer ending after December 31, 1986, by reason of the amendments made by this section shall be treated as imposed ratably over the 3 taxable years beginning with such 1st taxable year, and (B) any increase in tax imposed by such chapter 1 for the 2nd taxable year of the taxpayer ending after December 31, 1986 (determined without regard to subparagraph (A)), by reason of the amendments made by this section shall be treated as imposed ratably over the 2 taxable years beginning with such 2nd taxable year. (8) TREATMENT OF CERTAIN INSTALLMENT OBLIGATIONS.—Not-

withstanding the amendments made by subtitle B of title III, gain with respect to installment payments received pursuant to notes issued in accordance with a note agreement dated as of August 29, 1980, where— (A) such note agreement was executed pursuant to an agreement of purchsise and sale dated April 25, 1980, (B) more than V of the installment payments of the a aggregate principal of such notes have been received by August 29, 1986, and (C) the last installment payment of the principal of such notes is due August 29, 1989, shall be taxed at a rate of 28 percent, SEC. 812. DISALLOWANCE OF USE OF INSTALLMENT METHOD FOR CERTAIN OBLIGATIONS.

(a) IN GENERAL.—Section 453 (relating to installment method) is amended by adding at the end thereof the following new subsection: "(j) CURRENT INCLUSION IN CASE OF REVOLVING CREDIT PLANS,

ETC.—In the case of— "(1) any disposition of personal property under a revolving credit plan, or "(2) any installment obligation arising out of a sale of— "(A) stock or securities which are traded on an established securities market, or "(B) to the extent provided in regulations, property (other than stock or securities) of a kind regularly traded on an established market, subsection (a) and section 453A shall not apply, and, for purposes of this title, all payments to be received shall be treated as received in the year of disposition. The Secretary may provide for the application of this subsection in whole or in part for transactions in which the rules of this subsection otherwise would be avoided through the use of related parties, pass-thru entities, or intermediaries." (b) CONFORMING AMENDMENTS.—

(1) Section 453A(a)(2) (relating to installment method for dealers in personal property) is amended by striking out the last sentence thereof.

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