Page:United States Statutes at Large Volume 101 Part 2.djvu/1184

 101 STAT. 1330-390

PUBLIC LAW 100-203—DEC. 22, 1987

"(II) for the period beginning on the date of sale, ^ and ending on the date such payment is received, and '* -'' "(III) by using the applicable Federal rate under section 1274 (without regard to subsection (d)(2) ? mii " thereoO in effect at the time of the sale compounded semiannually, "(ii) INTEREST NOT TAKEN INTO ACCOUNT.—For purposes of clause (i), the portion of any tax attributable to the receipt of any payment shall be determined ^ without regard to any interest imposed under subparagraph (A). "(iii) TAXABLE YEAR OF SALE.—No interest shall be determined for any payment received in the taxable year of the disposition from which the installment obligation arises. "(C) TREATMENT AS INTEREST.—Any amount payable under this paragraph 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.' (c) TREATMENT OF INSTALLMENT OBLIGATIONS OF NONDEALERS.—

Section 453A (relating to installment method for dealers in personal property) is amended to read as follows: "SEC. 453A. SPECIAL RULES FOR NONDEALERS OF REAL PROPERTY.

"(a) GENERAL RULE.—In the case of an installment obligation to which this section applies— "(1) interest shall be paid on the deferred tax liability with respect to such obligation in the manner provided under subsection (c), and "(2) the pledging rules under subsection (d) shall apply. "(b) INSTALLMENT OBLIGATIONS TO WHICH SECTION APPLIES.—

"(1) IN GENERAL.—This section shall apply to any obligation which arises from the disposition of real property under the installment method which is property used in the taxpayer's trade or business or property held for the production of rental income, but only if the sales price of such property exceeds $150,000. "(2) SPECIAL RULE FOR INTEREST PAYMENTS.—For purposes of

subsection (a)(D, this section shall apply to an obligation described in paragraph (1) arising during a taxable year only if— "(A) such obligation is outstanding as of the close of such taxable year, and "(B) the face amount of all obligations of the taxpayer described in paragraph (1) which arose during, and are outstanding as of the close of, such taxable year exceeds $5,000,000. Except as provided in regulations, all persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as one person for purposes of this paragraph. "(3) EXCEPTION FOR PERSONAL USE AND FARM PROPERTY.—An

installment obligation shall not be treated as described in paragraph (1) if it arises from the disposition— "(A) by an individual of personal use property (within the meaning of section 1275fll)X3)), or

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