Page:United States Statutes at Large Volume 100 Part 3.djvu/776

 100 STAT. 2584

PUBLIC LAW 99-514—OCT. 22, 1986

be included in gross income and shall be exempt from taxation under this subtitle. "(c) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to amounts received on or after July 1, 1986, except that no amount shall be required to be deducted and withheld by reason of the amendment made by subsection (a) from any payment made before the date of the enactment of this Act. SEC. 1248. LIMITATION ON COST OF PROPERTY IMPORTED FROM RELATED PERSONS.

(a) IN GENERAL.—Part IV of subchapter O of chapter 1 (relating to special rules for determination of basis) is amended by inserting after section 1059 the following new section: "SEC. 1059A. LIMITATION ON TAXPAYERS BASIS OR INVENTORY COST IN PROPERTY IMPORTED FROM RELATED PERSONS.

"(a) IN GENERAL.—If any property is imported into the United States in a transaction (directly or indirectly) between related persons (within the meaning of section 482), the amount of any costs— "(1) which are taken into account in computing the basis or inventory cost of such property by the purchaser, and "(2) which are also taken into account in computing the customs value of such property, shall not, for purposes of computing such basis or inventory cost for purposes of this chapter, be greater than the amount of such costs taken into account in computing such customs value. "(b) CUSTOMS VALUE; IMPORT.—For purposes of this section— "(1) CUSTOMS VALUE.—The term 'customs value' means the value taken into account for purposes of determining the amount of any customs duties or any other duties which may be imposed on the importation of any property. "(2) IMPORT.—Except as provided in regulations, the term 'import' means the entering, or withdrawal from warehouse, for consumption." (h) CONFORMING AMENDMENT.—The table of sections for part IV of subchapter O of chapter 1 is amended by inserting after the item relating to section 1059 and inserting in lieu thereof the following new item: "Sec. 1059A. Limitation on taxpayer's basis or inventory cost in property imported from related persons."

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to transactions entered into after March 18, 1986. SEC. 1249. TREATMENT OF DUAL RESIDENCE CORPORATIONS.

(a) GENERAL RULE.—Section 1503 (relating to consolidated return) is amended by adding at the end thereof the following new subsection: "(d) DUAL CONSOLIDATED Loss.—

"(1) IN GENERAL.—The dual consolidated loss for any taxable year of any corporation shall not be allowed to reduce the taxable income of any other member of the affiliated group for - the taxable year or any other taxable year. i_i.. "(2) DUAL CONSOLIDATED LOSS.—For purposes of this section—

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