Page:United States Statutes at Large Volume 103 Part 3.djvu/274

 103 STAT. 2342 PUBLIC LAW 101-239—DEC. 19, 1989 "(i) the interest pedd or accrued by the taxpayer during the taxable year, over "(ii) the amount of interest includible in the gross income of such taxpayer for such taxable year. The Secretary may by regulations provide for adjustments in determining the amount of net interest expense. "(C) TREATMENT OF AFFILIATED GROUP.—Al l members of the same affiliated group (within the meaning of section 1504(a)) shall be treated as 1 taxpayer. "(7) REGULATIONS.— The Secretary shall prescribe such regu- lations as may be appropriate to carry out the purposes of this subsection, including— "(A) such regulations as may be appropriate to prevent the avoidance of the purposes of this subsection, "(B) regulations providing such adjustments in the case of corporations which are members of an affiliated group as may be appropriate to carry out the purposes of this subsec- tion, and "(C) regulations for the coordination of this subsection with section 884." ^^ ^ . 26 USC 163 note. (b) EFFECTIVE DATE.— (1) IN GENERAL.— The amendment made by this section shall apply to interest paid or accrued in taxable years beginning after July 10, 1989. (2) SPECIAL RULE FOR DEMAND LOANS, ETC.— In the case of any demand loan (or other loan without a fixed term) which was outstanding on July 10, 1989, interest on such loan to the extent attributable to periods before September 1, 1989, shall not be treated as disqualified interest for purposes of section 163(j) of the Internal Revenue Code of 1986 (as added by subsection (a)). SEC. 7211. LIMITATIONS ON REFUNDS DUE TO NET OPERATING LOSS ^ CARRYBACKS OR EXCESS INTEREST ALLOCABLE TO COR- - PORATE EQUITY REDUCTION TRANSACTIONS. (a) IN GENERAL. —Paragraph (1) of section 172(b) (relating to years to which loss may be carried) is amended by adding at the end thereof the following new subparagraph; "(M) EXCESS INTEREST LOSS.— "(i) IN GENERAL. — If— "(I) there is a corporate equity reduction trans- action, and "(II) an applicable corporation has a corporate equity reduction interest loss for any loss limita- tion year ending after August 2, 1989, then the corporate equity reduction interest loss shall be a net operating loss carryback and carryover to the taxable years described in subparagraphs (A) and (B), except that such loss shall not be carried back to a taxable year preceding the taxable year in which the corporate equity reduction transaction occurs. "(ii) Loss LIMITATION YEAR.— For purposes of clause (i) »« and subsection (m), the term 'loss limitation year' means, with respect to any corporate equity reduction transaction, the taxable year in which such transaction occurs and each of the 2 succeeding taxable years.

�