Page:United States Statutes at Large Volume 102 Part 4.djvu/420

 102 STAT. 3390 26 USC 469 note.

PUBLIC LAW 100-647—NOV. 10, 1988 (2) Subsection (d) of section 502 of the Reform Act (defining qualified investor) is amended by adding after paragraph (2) the following new paragraph: "(3) SPECIAL RULE FOR CERTAIN PARTNERSHIPS.—In the case of any property which is held by a partnership— "(A) which placed such property in service on or after December 31, 1985, and before August 17, 1986, and continuously held such property through the close of the taxable year for which the determination is being made, and "(B) which was not treated as a new partnership or as terminated at any lime on or after the date on which such property was placed in service and through the close of the taxable year for which the determination is being made, aragraph (IXAXi) shall be applied by substituting 'Decemer 31, 1988' for 'August 16, 1986' the 2nd place it appears." (3) 'The subsection (d) of section 502 of the Reform Act which relates to special rules is redesignated as subsection (e).

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(c) AMENDMENTS RELATED TO SECTION 511 OF THE REFORM ACT.—

(1) Subparagraph (A) of section 163(d)(3) of the 1986 Code (defining investment interest) is amended by striking out "incurred or continued to purchase or carry" and inserting in lieu thereof "properly allocable to". (2) Subparagraph (B) of section 163(d)(4) of the 1986 Code is amended to read as follows: "(B) INVESTMENT INCOME.—The term 'investment income' means the sum of— "(i) gross income (other than gain taken into account under clause (ii)) from property held for investment, and "(ii) any net gain attributable to the disposition of property held for investment." (3) Subparagraph (A) of section 163(d)(6) of the 1986 Code is amended to read as follows: "(A) IN GENERAL.—The amount of interest paid or accrued during any such taxable year which is disallowed under this subsection shall not exceed the sum of— "(i) the amount which would be disallowed under this subsection if— "(I) paragraph (1) were applied by substituting 'the sum of the ceiling amount and the net investment income' for 'the net investment income', and "(II) paragraphs (4)(E) and (5)(A)(ii) did not apply, and "(ii) the applicable percentage of the excess of^ "(I) the amount which (without regard to this paragraph) is not allowable as a deduction under this subsection for the taxable year, over "(II) the amount described in clause (i). The preceding sentence shall not apply to any interest treated as paid or accrued during the taxable year under paragraph (2)." (4) Subparagraph (A) of section 163(h)(2) of the 1986 Code is amended by striking out "incurred or continued in connection with the conduct of' and inserting in lieu thereof "properly allocable to".

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