Page:United States Statutes at Large Volume 102 Part 4.djvu/678

 102 STAT. 3648

PUBLIC LAW 100-647—NOV. 10, 1988 "(4) RECAPTURE AMOUNT.—For purposes of this subsection— "(A) IN GENERAL.—The recapture amount with respect to any indebtedness is the amount equal to the product of— "(i) the federally-subsidized amount with respect to the indebtedness, and "(ii) the holding period percentage. "(B) FEDERALLY-SUBSIDIZED AMOUNT.—The federally-sub-

sidized amount with respect to any indebtedness is the amount equal to 6.25 percent of the highest principal amount of the indebtedness for which the taxpayer was liable. "(C) HOLDING PERIOD PERCENTAGE.— "(i) DISPOSITIONS DURING IST 5 YEARS.—If the disposi-

tion of the taxpayer's interest in the residence occurs during the 5-year period beginning on the testing date, the holding period percentage is the percentage determined by dividing the number of full months during which the requirements of subparagraph (D) were met by 60. "(ii) DISPOSITIONS DURING 2D 5 YEARS.—If the disposi-

tion of the taxpayer's interest in the residence occurs during the 5-year period following the 5-year period described in clause (i), the holding period percentage is the percentage determined by dividing— "(I) the excess of 120 over the number of full months during which such requirements were met by "(II) 60. "(iii) RETIREMENTS OF INDEBTEDNESS.—If the feder-

ally-subsidized indebtedness is completely repaid during any month of the 10-year period beginning on the testing date, the holding period percentage for succeeding months shall be determined by reducing ratably over the remainder of such period (or, if lesser, 5 years) the holding period percentage which would have been determined under this subparagraph had the taxpayer disposed of his interest in the residence on the date of the repayment. "(D) TESTING DATE.—The term 'testing date' means the earliest date on which all of the following requirements are met: "(i) The indebtedness is federally-subsidized indebtedness. "(ii) The taxpayer is liable in whole or part for payment of the indebtedness. "(5) REDUCTION OF RECAPTURE AMOUNT IF TAXPAYER MEETS CERTAIN INCOME LIMITATIONS.—

"(A) IN GENERAL.—The recapture amount which would (but for this paragraph) apply with respect to any disposition during a taxable year shall be reduced (but not below zero) by 2 percent of such amount for each $100 by which adjusted qualifying income exceeds the modified adjusted gross income of the taxpayer for such year. "(B) ADJUSTED QUALIFYiNG INCOME.—For purposes of this paragraph, the term 'adjusted qualifying income' me£ms the amount equal to the sum of— "(i) $5,000, plus

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