Page:United States Statutes at Large Volume 101 Part 2.djvu/1196

 101 STAT. 1330-402

PUBLIC LAW 100-203—DEC. 22, 1987

, of the taxable year (determined without regard to subsection (b)) ^ equal or exceed the lesser of— '. "(A) the product of— "(i) the applicable amounts paid or incurred during '} the preceding taxable year, divided by the number of r* " months in such taxable year, multiplied by "(ii) the number of months in the deferral period of \9n.the preceding taxable year, or "(B) the applicable percentage of the adjusted taxable income for the deferral period of the taxable year. "(2) APPLICABLE PERCENTAGE.—**°*The term 'applicable percentage' means the percentage (not in excess of 95 percent) -^ determined by dividing— ir, "(A) the applicable amounts paid or incurred during the 3 6t }•:-,- taxable years immediately preceding the taxable year, by "(B) the adjusted taxable income of such corporation for such 3 taxable years. "(d) MAXIMUM DEDUCTIBLE AMOUNT.—For purposes of this section, the term 'maximum deductible amount' means the sum of— "(1) the applicable amounts paid or incurred during the deferral period, plus ,,. "(2) an amount equal to the product of^ .-. "(A) the amount determined under paragraph (1), divided by the number of months in the deferral period, multiplied by "(B) the number of months in the nondeferral period. "(e) DISALLOWANCE OF N E T OPERATING LOSS CARRYBACKS.—No net

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operating loss carryback shall be allowed to (or from) any taxable year of a personal service corporation to which an election under section 444 applies. "(f) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) APPLICABLE AMOUNT.—The term 'applicable amount' " means any amount paid to an employee-owner which is includible in the gross income of such employee, other than— "(A) any gain from the sale or exchange of property <. between the owner-employee and the corporation, or "(B) any dividend paid by the corporation. is "(2) EMPLOYEE-OWNER.—The term 'employee-owner' has the meaning given such term by section 296A(b)(2). ^, ^"'I „; / ^ ^ ' ^ ^

"(3) NONDEFERRAL AND DEFERRAL PERIODS.— "(A) DEFERRAL PERIOD.—The term 'deferral

period' has the meaning given to such term by section 444(b)(4). "(B) NONDEFERRAL PERIOD.—The term 'nondeferral period' means the portion of the taxable year of the per;..-. sonal service corporation which occurs after the portion of such year constituting the deferral period. * ^ * "(4) ADJUSTED TAXABLE INCOME.—The term 'adjusted taxable income' means taxable income increased by any amount paid or incurred to an employee-owner which was includible in the gross income of such employee-owner." (2) CLERICAL AMENDMENT.—The table of sections for part IX of subchapter B of chapter 1 is cunended by adding at the end thereof the following item:

'""•Copy read "PERCENTAGE.—". ' ' ' Copy read "period." ".

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