Page:United States Statutes at Large Volume 100 Part 3.djvu/794

 100 STAT. 2602

PUBLIC LAW 99-514—OCT. 22, 1986

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(I) the redemptions of limited partnership interests for cash and property described in an agreement (as amended) dated March 12, 1981, (II) the subsequent disposition of the properties ., distributed in such redemptions, and (III) interest earned before January 1, 1987, on ,v« < bank deposits of proceeds received from such redemptions to the extent such deposits are located '',.-in the United States Virgin Islands. (iii) LIMITATION.—The aggregate reduction in tax by reason of this subparagraph shall not exceed $8,312,000. If the taxes which would be payable as the result of the application of the amendment made by {{,,• • '^ section 1275(b) to pre-1987 open years exceeds the io • ' limitation of the preceding sentence, such excess shall ( be treated as attributable to income received in taxable years in reverse chronological order. (d) REPORT ON IMPLEMENTING AGREEMENTS.—If, during the 1-year

period beginning on the date of the enactment of this Act, any implementing agreement described in subsection (b) or (c) is not executed, the Secretary of the Treasury or his delegate shall report to the Committee on Finance of the United States Senate, the Committee on Ways and Means, and the Committee on Interior and Insular Affairs of the House of Representatives with respect to— (1) the status of such negotiations, and (2) the reason why such agreement has not been executed. (e) TREATMENT OF CERTAIN UNITED STATES PERSONS.—Except as

otherwise provided in regulations prescribed by the Secretary of the Treasury or his delegate, if a United States person becomes a resident of Guam, American Samoa, or the Northern Mariana Islands, the rules of section 877(c) of the Internal Revenue Code of 1954 shall apply to such person during the 10-year period beginning when such person became such a resident. The preceding sentence shall apply to dispositions after December 31, 1985, in taxable years ending after such date.

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TITLE XIII—TAX-EXEMPT BONDS

Subtitle A—Amendments of Internal Revenue Code of 1954 SEC. 1301. STATE AND LOCAL BONDS. (a) EXCLUSION FOR INTEREST ON BONDS WHICH MEET CERTAIN

REQUIREMENTS.—Section 103 (relating to interest on certain governmental obligations) is amended to read as follows: "SEC. 103. INTEREST ON STATE AND LOCAL BONDS.

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"(a) EXCLUSION.—Except as provided in subsection (b), gross income does not include interest on any State or local bond. "(b) EXCEPTIONS.—Subsection (a) shall not apply to— "(1) PRIVATE ACTIVITY BOND WHICH IS NOT A QUALIFIED BOND.—

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Any private activity bond which is not a qualified bond (within the meaning of section 141). "(2) ARBITRAGE BOND.—Any arbitrage bond (within the meaning of section 148).

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