Page:United States Statutes at Large Volume 102 Part 4.djvu/632

 102 STAT. 3602

PUBLIC LAW 100-647—NOV. 10, 1988 "(B) GUARANTEED PAYMENT.—For purposes of subpara-

26 USC 444 note.

graph (A), the term 'guaranteed payment' means any payment referred to in section 707(c)." (9) Paragraph (4) of section 7519(d) of the 1986 Code is amended by adding at the end thereof the following new sentence: "Notwithstanding the preceding provisions of this paragraph, for taxable years beginning after 1987, the applicable percentage for any partnership or S corporation shall be 100 percent if more than 50 percent of such entity's net income for the short taxable year which would have resulted if the entity had not made an election under section 444 would have been allocated to partners or shareholders who would not have been entitled to the benefits of section 806(e)(2)(C) of the Tax Reform Act of 1986 with respect to such income." (10) Subparagraphs (A) and (B) of section 7519(d)(2) of the 1986 Code are each amended by striking out "(other than credits)" and inserting in lieu thereof "(other than credits and taxexempt income)". (11) Paragraph (4) of section 10206(d) of the Revenue Act of 1987 is amended by adding at the end thereof the following new sentence: "The preceding sentence shall apply only in the case of an election under section 444 of such (Dode made for a taxable year beginning before 1989." (12) Subparagraph (A) of section 444(d)(2) of the 1986 Code is amended by inserting "or otherwise terminates such election" before the period a t the end of the first sentence thereof. (13) Paragraph (4) of section 444(b) of the 1986 Code is amended by striking out "the term" and inserting in lieu thereof "except as provided in regulations, the term". (14XA) Paragraph (4) of section 280H(f) of the 1986 Code is amended to read as follows: "(4) ADJUSTED TAXABLE INCOME.—The term 'adjusted taxable income' means taxable income determined without regard to— "(A) any amount paid to an employee-owner which is includible in the gross income of such employee-owner, and "(B) any net operating loss carryover to the extent such carryover is attributable to amounts described in subparagraph (A)." (B) Subparagraph (A) of section 7519(d)(3) of the 1986 Code is amended by striking out "or incurred". (C) Subsections (c)(l)(A)(i) and (d)(1) of section 280H of the 1986 Code are each amended by striking out "or incurred". (f) AMENDMENTS RELATED TO SECTION 10211 OF THE ACT.—

26 USC 7704 note.

(1) Paragraph (4) of section 7704(e) of the 1986 Code is amended by striking out "as may be required" and inserting in lieu thereof "or to pay such amounts as may be required". (2) Paragraph (2) of section 10211(c) of the Revenue Act of 1987 is amended by adding at the end thereof the following new subparagraph: "(C) COORDINATION WITH PASSIVE-TYPE INCOME REQUIRE-

MENTS.—In the case of an existing partnership, paragraph (1) of section 7704(c) of the Internal Revenue Code of 1986 (as added by this section) shall be applied by substituting for 'December 31, 1987' the earlier of— "(i) December 31, 1997, or

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