Page:United States Statutes at Large Volume 102 Part 4.djvu/418

 102 STAT. 3388

PUBLIC LAW 100-647—NOV. 10, 1988 subparagraph (A)(ii) for the taxable year to the extent necessary to prevent the avoidance of this section." (3) Subparagraph (A) of section 469(g)(2) of the 1986 Code is amended— (A) by striking out "paragraph (1)" and inserting in lieu thereof "paragraph (1)(A)"; and (B) by striking out "such losses" the first place it appears and inserting in lieu thereof "losses described in paragraph (1)(A)". (4) Section 469(g)(3) of the 1986 Code is amended— (A) by striking out "realized (or to be realized)" and inserting in lieu thereof "(realized or to be realized", and (B) by inserting a closing parenthesis after "completed". (5) Paragraph (4) of section 469(h) of the 1986 Code (relating to certain closely held C corporations and personal service corporations) is amended by inserting "only" before " i f. (6) Paragraph (1) of section 469(i) of the 1986 Code (relating to $25,000 offset for rental real estate activities) is amended by striking out "in the taxable year in which such portion of such loss or credit arose" and inserting in lieu thereof "in such taxable year (and if any portion of such loss or credit arose in another taxable year, in such other taxable year)". (7) Subparagraph (C) of section 469(i)(6) of the 1986 Code (relating to interest as a limited partner) is amended by striking out "No" and inserting in lieu thereof "Except as provided in regulations, no". (8) Subparagraph (A) of section 469(j)(6) of the 1986 Code (relating to special rule for gifts) is amended by inserting "with respect to which a deduction has not been allowed by reason of subsection (a)" before ", and". (9) Section 469(j) of the 1986 Code (relating to definitions and special rules) is amended by adding a t the end thereof the following new paragraphs: "(10) COORDINATION WITH SECTION 280A.—If a passive activity

involves the use of a dwelling unit to which section 280A(c)(5) applies for any taxable year, any income, deduction, gain, or loss allocable to such use shall not be taken into account for purposes of this section for such taxable year. "(11) AGGREGATION

26 USC 469 note.

OF MEMBERS OF AFFIUATED GROUPS.—

Except as provided in regulations, all members of an affiliated group which files a consolidated return shall be treated as 1 corporation." (10) Section 501(c) of the Reform Act is amended by adding at the end thereof the following new paragraph: "(4) INCOME FROM SALES OF PASSIVE ACTIVITIES IN TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 1987.—If^

"(A) gain is recognized in a taxable year beginning after December 31, 1986, from a sale or exchange of an interest in an activity in a taxable year beginning before January 1, 1987, and "(B) such gain would have been treated as gain from a passive activity had section 469 of the Internal Revenue Code of 1986 (as added by this section) been in effect for the taxable year in which the sale or exchange occurred and for all succeeding taxable years, then such gain shall be treated as gain from a passive activity for purposes of such section."

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