Page:United States Statutes at Large Volume 102 Part 4.djvu/417

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3387

"(C) CERTAIN RULES MADE APPLICABLE.—Rules similar to

the rules of subparagraph (C), (D), and (E) of paragraph (8) shall apply for purposes of this paragraph and section 108(g)." (6)(A) Paragraphs (6) and (7) of section 108(d) of the 1986 Code are each amended by striking out "subsections (a) and (b)" and inserting in lieu thereof "subsections (a), (b), and (g)". (B) The subsection heading for section 108(d) of the 1986 Code is amended by striking out "SUBSECTIONS (a), AND (b)" and inserting in lieu thereof "SUBSECTIONS (a), (b), AND (g)". (C) The headings for paragraphs (6) and (7)(A) of section 108(d) of the 1986 Code are each amended by striking out "SUBSECTIONS (a) AND (b)" and inserting in lieu thereof "SUBSECTIONS (a), (b), AND (g)". (b) AMENDMENT RELATED TO SECTION 406 OF THE REFORM ACT.—

Section 406 of the Reform Act is amended— 26 USC 1202 (1) by inserting "before October 1, 1987," after "from the note, sale", and (2) by striking out "to the extent such gain" and all that follows down through the period at the end thereof and inserting in lieu thereof "to the extent such gain is properly taken into account under the taxpayer's method of accounting during 1987.". (c) AMENDMENT RELATED TO SECTION 413 OF THE REFORM ACT.—

Subsection (a) of section 1254 of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(4) ADJUSTMENT FOR AMOUNTS INCLUDED IN GROSS INCOME UNDER SECTION 617 (b)(1)(A).—The amount of the expenditures

referred to in paragraph (IXAXi) shall be properly adjusted for amounts included in gross income under section 617(b)(l)(A)." SEC. 1005. AMENDMENTS RELATED TO TITLE V OF THE REFORM ACT. (a) AMENDMENTS RELATED TO SECTION 501 OF THE REFORM ACT.—

(1) Clause (ii) of section 469(e)(l)(A) of the 1986 Code (relating to certain income not treated as income from passive activity) is amended by inserting "not derived in the ordinary course of a trade or business which is" after "gain or loss". (2)(A) Subparagraph (A) of section 469(g)(l) of the 1986 Code (relating to disposition of interests in passive activities in fully taxable transactions) is amended to read as follows: "(A) IN GENERAL.—If all gain or loss realized on such disposition is recognized, the excess of— "(i) the sum of— "(I) any loss from such activity for such taxable year (determined after application of subsection 03)), plus "(II) any loss realized on such disposition, over "(ii) net income or gain for such taxable year from all -• passive activities (determined without regard to losses described in clause (i)), shall be treated as a loss which is not from a passive activity." (B) Subparagraph (C) of section 469(g)(l) of the 1986 Code is amended to read as follows: "(C) INCOME FROM PRIOR YEARS.—To the extent provided

in regulations, income or gain from the activity for preceding taxable years shall be taken into account under

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