Page:United States Statutes at Large Volume 111 Part 1.djvu/1023

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 999 "(i) the cumulative taxable income (or loss) under the contract as of the close of such taxable year, is within "(ii) 10 percent of the cumulative look-back tsixable income (or loss) under the contract as of the close of the most recent taxable year to which paragraph (1)(B) applied (or would have applied but for subparagraph (B)). "(B) DE MINIMIS DISCREPANCIES. —Paragraph (1)(B) shall not apply in any case to which it would otherwise apply if— "(i) the cumulative taxable income (or loss) under the contract as of the close of each prior contract year, is within "(ii) 10 percent of the cumulative look-back income (or loss) under the contract as of the close of such prior contract year. " (C) DEFINITIONS. —For purposes of this paragraph— "(i) CONTRACT YEAR.— The term 'contract year' means any taxable year for which income is taken into account under the contract. "(ii) LOOK-BACK INCOME OR LOSS.—The look-back income (or loss) is the amount which would be the taxable income (or loss) under the contract if the allocation method set forth in paragraph (2)(A) were used in determining taxable income. "(iii) DISCOUNTING NOT APPLICABLE.— The amounts taken into account after the completion of the contract shall be determined without regard to any discounting under the 2nd sentence of paragraph (2). " (D) CONTRACTS TO WHICH PARAGRAPH APPLIES. — Th is paragraph shall only apply if the taxpayer msikes an election under this subparagraph. Unless revoked with the consent of the Secretary, such an election shall apply to all long-term contracts completed during the taxable year for which election is made or during any subsequent taxable year.", (b) MODIFICATION OF INTEREST RATE. — (1) IN GENERAL. — Subparagraph (C) of section 460(b)(2) is amended by striking "the overpayment rate established by section 6621" and inserting "the adjusted overpayment rate (as defined in paragraph (7))". (2) ADJUSTED OVERPAYMENT RATE.— Subsection (b) of section 460 is amended by adding at the end the following new paragraph: " (7) ADJUSTED OVERPAYMENT RATE. — "(A) IN GENERAL.— The adjusted overpayment rate for any interest accrual period is the overpayment rate in effect under section 6621 for the calendar quarter in which such interest accrual period begins. "(B) INTEREST ACCRUAL PERIOD.— For purposes of subparagraph (A), the term 'interest accrual period' means the period— "(i) beginning on the day after the return due date for any taxable year of the taxpayer, and "(ii) ending on the return due date for the following taxable year.

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