Page:United States Statutes at Large Volume 101 Part 2.djvu/1185

 PUBLIC LAW 100-203—DEC. 22, 1987
 * H.;

101 STAT. 1330-391

"(B) of any property used or produced in the trade or business of farming (within the meaning of section 2032A(e) (4) or (5)). "(4) SPECIAL RULE FOR TIMESHARES AND RESIDENTIAL LOTS.—An

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installment obligation shall not be treated as described in paragraph (1) if it arises from a disposition described in section 453(1)(2)(B), but the provisions of section 453(1)(3) (relating to interest payments on timeshares and residential lots) shall apply to such obligation. "(5) SALES PRICE.—For purposes of paragraph (1), all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as 1 sale or exchange. "(c) INTEREST ON DEFERRED TAX LIABILITY.—

"(1) IN GENERAL.—If an obligation to which this section applies is outstanding as of the close of any taxable year, the tax imposed by this chapter for such taxable year shall be increased by the amount of interest determined in the manner provided under paragraph (2). "(2) COMPUTATION OF INTEREST.—For purposes of paragraph

(1), the interest for any taxable year shall be an amount equal to the product of— "(A) the applicable percentage of the deferred tax liability with respect to such obligation, multiplied by "(B) the underpayment rate in effect under section 6621(a)(2) for the month with or within which the taxable year ends. "(3) DEFERRED TAX LIABILITY.—For purposes of this section, the term 'deferred tax liability' means, with respect to any taxable year, the product of— "(A) the amount of gain with respect to an obligation which has not been recognized as of the close of such taxable year, multiplied by "(B) the maximum rate of tax in effect under section 1 or ^j^ 11, whichever is appropriate, for such taxable year. y|^; "(4) APPLICABLE PERCENTAGE.—For purposes of this subsection, the term 'applicable percentage' means, with respect to obligations arising in any taxable year, the percentage determined by dividing— "(A) the portion of the aggregate face amount of such obligations outstanding as of the close of such taxable year in excess of $5,000,000, by "(B) the aggregate face amount of such obligations outstanding as of the close of such taxable year. "(5) REGULATIONS.*"^—The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subsection including regulations providing for the application of this subsection in the case of contingent payments, short taxable years, and pass-thru entities. "(d) PLEDGES, ETC., OF INSTALLMENT OBLIGATIONS.—

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"(1) IN GENERAL.—For purposes of section 453, if any indebtedness (hereinafter in this subsection referred to as 'secured indebtedness') is secured by an installment obligation to which this section applies, the net proceeds of the secured indebted">• Copy read "REGULATIONS—".

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